Question 1

At lunch recently, two accountants were discussing the merits of the FASB's conceptual framework project, which resulted in the publication of seven Statements of Financial Accounting Concepts and required more than ten years of effort. One accountant thought the effort was a waste of resources, since accounting was unlike physics, chemistry, and biology, where natural laws apply. The other accountant thought the effort was very valuable. He stated that "accounting, like any other discipline, benefits from having a coherent theory."
Required:
Write a brief essay that discusses the advantages that are derived from the existence of a conceptual framework for financial accounting and reporting.

Accepted Answer

The answer of At lunch recently, two accountants were discussing...

Question 2

Management discussion and analysis would be included in the supplementary information to the financial statements.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following items would most likely be a violation of the materiality constraint?

Accepted Answer

A)  A company did not separately report an unusual gain of $100,000. Its income from operations was $20,000,000. 
B)  A company having reported total assets of $50,000,000 immediately expensed the purchase of 20 pencil sharpeners that have an estimated useful life of three years. 
C)  A $75,000 illegal bribe by an executive of the company to a foreign official was not separately disclosed in the annual report. 
D)  A $2,000 expenditure to improve a building that originally cost $10,000,000 was immediately expensed.

Question 4

The FASB's Conceptual Framework was established as a foundation for many interrelated objectives, concepts, principles and definitions. The following is a series of descriptive statements.   Required:
Match each objective with the appropriate statement by placing the appropriate letter in the space provided.

Accepted Answer

The answer of The FASB's Conceptual Framework was established as...

Question 5

The FASB and IASB describe four characteristics that enhance the decision usefulness of information that is relevant and faithfully represented. What are these characteristics and provide a brief explanation of each.

Accepted Answer

The answer of The FASB and IASB describe four characteristics...

Question 6

A list of statements follows: 
a._______are applications of______ and_____ to differing types of transactions. 
b._________are specific implementation procedures.
c._________and______are broad and definitional
d.The ac counting projects for the conceptual framework project for financial accounting and reporting define the accounting______ how they should be______ and______
 Required:
Fill in the words necessary to complete the statements.

Accepted Answer

The answer of A list of statements follows: 
a._______are applications...

Question 7

List 5 of the important accounting assumptions that have had an impact on the development of GAAP and Accounting.

Accepted Answer

The answer of List 5 of the important accounting assumptions...

Exam 2: Financial Reporting: Its Conceptual Framework

Management discussion and analysis would be included in the supplementary information to the financial statements.

Which of the following items would most likely be a violation of the materiality constraint?

The FASB and IASB describe four characteristics that enhance the decision usefulness of information that is relevant and faithfully represented. What are these characteristics and provide a brief explanation of each.

List 5 of the important accounting assumptions that have had an impact on the development of GAAP and Accounting.