6. Application of the full disclosure principle a. Is theoretically desirable but not practical. b. Is violated when important financial information je buried in the notes to financial statements. Is demonstrated by the use of supplementary information presenting the effects of changing prices.. d. Requires that the financial statements should be consistent and comparable.
6. Application of the full disclosure principle a. Is theoretically desirable but not practical. b. Is violated when important financial information je buried in the notes to financial statements. Is demonstrated by the use of supplementary information presenting the effects of changing prices.. d. Requires that the financial statements should be consistent and comparable.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:6. Application of the full disclosure principle
a. Is theoretically desirable but not practical.
b. Is violated when important financial information je
buried in the notes to financial statements.
c. Is demonstrated by the use of supplementary
information presenting the effects of changing prices..
d. Requires that the financial statements should be
consistent and comparable.
7. Accounting policies disclosed in the notes to financial
statements typically include all of the following, except
a. The cost flow assumption
b. The depreciation method
c. Significant estimates
d. Significant inventory purchasing policies
8. Significant accounting policies may not be
a. Selected on the basis of judgment.
b. Selected from existing acceptable alternatives.
c. Unusual ór innovative in application.
d. Omitted from financial statement disclosure.
9. An inventory accounting policy that should be disclosed
in a summary of significant accounting policies is
a. Composition of inventory into raw materials,
work in process and finished goods
b. Major backlog of inventory orders
c. Method used for pricing inventory
d. All of these should be disclosed in the summary of
significant accounting policies.
10. Which of the following should be disclosed in a şummary
of significant accounting policies?
a. Type of executory contract
b. Cumulative effect of change in accounting policy
c. Claims of equity holders
d. Depreciation method
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