Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Chapter 2, Problem 14C
To determine
Evaluate the following the number statements:
- List out the fallacies, half-truths, circular reasoning, erroneous comments or conclusion and inconsistencies in the given statements.
- Explain the basis or authority by which the item listed can be considered as fallacies, half-truths, circular reasoning, erroneous, comments or conclusion and also indicate the statement that will be considered as correct when the statement or portion is merely out of context.
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Qualitative Characteristics
The following is a list of qualitative characteristics of useful accounting information identified in the FASB's and the IASB's Statement of Financial Accounting Concepts No. 8 and statements describing the qualities.
A. Comparability
B. Decision usefulness
C. Relevance
D. Faithful representation
E. Predictive value
F. Confirmatory value
G. Verifiability
H. Neutrality
I. Free from error
J. Consistency
K. Materiality
L. Timeliness
M. Understandability
N. Completeness
Required:
Select the appropriate letter identifying each quality on the statement describing the quality.
1.
Different knowledgeable and independent observers can reach consensus that a particular representation is faithful.
2.
Making information available to decision makers before it loses its capacity to influence decisions.
3.
Capacity to make a difference in a decision, enabling users to predict future outcomes and/or confirm prior expectations.
4.
Overall objective of…
Which of the following is not an objective of the conceptual framework?
O a. Provides guidance for transactions not addressed in existing
accounting standards
O b. Enables implementation of one universal set of accounting
standards
O c. Enables consistency of qualitative characteristics in financial
reports
O d. Addresses the common needs of users of financial reports
Which of the following is not an advantage of accounting standards?
Select one:
a. All of the given answers are correct.
b. It reduces the reliability of financial statements.
c. It helps to attain uniformity in accounting.
d. It provides guidance on the content and presentation of financial statements.
Chapter 2 Solutions
Intermediate Accounting: Reporting And Analysis
Ch. 2 - Prob. 1GICh. 2 - Prob. 2GICh. 2 - How do accounting concepts, principles, standards,...Ch. 2 - Prob. 4GICh. 2 - Prob. 5GICh. 2 - Prob. 6GICh. 2 - What is the Objective: Useful Information about...Ch. 2 - Prob. 8GICh. 2 - Prob. 9GICh. 2 - Define (a) return on investment, (b) risk, (c)...
Ch. 2 - Prob. 11GICh. 2 - Prob. 12GICh. 2 - Prob. 13GICh. 2 - Prob. 14GICh. 2 - Prob. 15GICh. 2 - Prob. 16GICh. 2 - What is the cost constraint, and how does it...Ch. 2 - Prob. 18GICh. 2 - Prob. 19GICh. 2 - Prob. 20GICh. 2 - Prob. 21GICh. 2 - Prob. 22GICh. 2 - Prob. 23GICh. 2 - Describe accrual accounting. What are the...Ch. 2 - What drives the timing of revenue recognition?...Ch. 2 - Prob. 26GICh. 2 - Prob. 27GICh. 2 - Prob. 28GICh. 2 - Prob. 29GICh. 2 - The information provided by financial reporting...Ch. 2 - Which of the following is considered a constraint...Ch. 2 - According to Statement of Financial Accounting...Ch. 2 - Prob. 4MCCh. 2 - Prob. 5MCCh. 2 - Prob. 6MCCh. 2 - Accruing net losses on obsolete inventory is an...Ch. 2 - Prob. 8MCCh. 2 - An accrued expense is an expense: a. incurred but...Ch. 2 - Prob. 10MCCh. 2 - Prob. 1ECh. 2 - Prob. 2ECh. 2 - Prob. 1CCh. 2 - Prob. 2CCh. 2 - Prob. 3CCh. 2 - Prob. 4CCh. 2 - An accountant must be familiar with the concepts...Ch. 2 - Prob. 6CCh. 2 - Prob. 7CCh. 2 - Prob. 8CCh. 2 - Prob. 9CCh. 2 - Accruals and Deferrals Generally accepted...Ch. 2 - Prob. 11CCh. 2 - Prob. 12CCh. 2 - You have been hired as an accounting consultant by...Ch. 2 - Prob. 14C
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Similar questions
- Qualitative Characteristics The following is a list of qualitativecharacteristics of useful accounting information identified in the FASB'sand the IASB's Statement of Financial Accounting Concepts No. 8 andstatements describing the qualities. A. ComparabilityB. Decision usefulnessC. RelevanceD. Faithful representation E. Predictive valueF. Confirmatory valueG. VerifiabilityH. NeutralityI. Free from error J. ConsistencyK. MaterialityL. TimelinessM. UnderstandabilityN. Completeness _ _ _ _ _ _1. Different knowledgeable and independent observers conreach consensus that a particular representation is faithful_ _ _ _ _ _2. Making information available to decision makers before itloses its capacity to influence decisions._ _ _ _ _ _3. Capacity to make a difference in a decision, enabling users to predict future outcomes and/or confirm prior expectations._ _ _ _ _ _4. Overall objective of financial information. _ _ _ _ _ _ 5. Absence of bias intended to influence financial statementusers'…arrow_forwardAccounting information provides useful information about business transactions and events. Those whoprovide and use financial reports must often select and evaluate accounting alternatives. The Conceptual Framework examines the characteristics of accounting information that make it useful for decision-making. It also points out that various limitations inherent in the measurement and reporting process may necessitate trade-offs or sacrifices among the characteristics of useful information.For each of the following pairs of information characteristics, provide a hypothetical situation in which inwhich one of the characteristics may be sacrificed in return for a gain in the other. Explain the situationand criterion should be used to evaluate trade-offs between information characteristics? give your opinionsthati) Relevance and faithful representation.ii) Comparability and consistency.iii) Relevance and consistency.iv) Relevance and understandability.arrow_forwardHow do Accounting standards Increase Financial Statement Reliability?arrow_forward
- Comparability is an enhancing qualitative characteristic that results in Select one: rigid uniformity in the application of accounting principles. information that enables users to identify and understand similarities in and differences among financial statement items. greater use of judgment in the application of accounting standards. the ability of users to understand inherently complex phenomena.arrow_forwardAccounting information provides useful information about business transactions and events. Those who provide and use financial reports must often select and evaluate accounting alternatives. The FASB statement on qualitative characteristics of accounting information examines the characteristics of accounting information that make it useful for decision-making. It also points out that various limitations inherent in the measurement and reporting process may necessitate trade-offs or sacrifices among the characteristics of useful information. Instructions a. Describe briefly the following characteristics of useful accounting information. 1. Relevance. 2. Faithful representation. 3. Understandability. 4. Comparability. 5. Consistency. b. For each of the following pairs of information characteristics, give an example of a situation in which one of the characteristics may be sacrificed in return for a gain in the other. 1. Relevance and faithful representation. 2.…arrow_forwardChoose the answer which is not true about the conceptual framework for financial reporting. a. the conceptual framework forms the theoretical foundation of accounting b. the conceptual framework constitutes the highest level of authoritative status c. the conceptual framework serves as the guide for the development & revision of accounting standards d. all of the foregoing statements are correct about the conceptual framework for financial reportingarrow_forward
- Generally accepted accounting principles play an important role in financial reporting.a. What is meant by the phrase generally accepted accounting principles?b. What are the major sources of these principles?c. Is there a single comprehensive list of generally accepted accounting principles? Explain. d. What types of accounting reports are prepared in conformity with generally accepted account-ing principles?arrow_forwardHow can the enhancing characteristic understandability be improved in high-quality accounting information? Do not simply repeat what it is, provide suggestions as to how a particular part of the enhancing characteristic could be improved. Please provide different answers and explanations than copy and pasting: “Information that is understandable to the average user of financial statements is highly desirable.”arrow_forward**Objective Question:** In accounting, why are the principles of Objectivity and Neutrality important, and how do they contribute to the reliability and impartiality of financial information presented to stakeholders? **Choices:** A) By allowing subjective judgments and biases to influence financial reporting. B) By ensuring that financial information is prepared based on factual evidence and without bias. C) By prioritizing the interests of management over those of external stakeholders. D) By disregarding the need for transparency and accuracy in financial reporting.arrow_forward
- Which of the following is considered a constraint on useful information by Statement of Financial Accounting Concepts No. 8? a. benefits costs b. conservatism c. timeliness d. verifiabilityarrow_forwardAccounting What are some common financial statement errors or discrepancies that analysts and auditors should watch out for?arrow_forwardQuestion: How does the Conceptual Framework for Financial Reporting reconcile the tensions between historical cost accounting and fair value accounting, and how does it strike a balance between providing relevant information for decision-making while ensuring the faithful representation of financial transactions in volatile and uncertain economic environments? ?arrow_forward
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