Intermediate Accounting - Myaccountinglab - Pearson Etext Access Card Student Value Edition
1st Edition
ISBN: 9780134047430
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
Chapter 2, Problem 2.9BE
Faithful Representation. Match the component of a faithful representation to its definition:
| Component of a Faithful Representation | Definition |
| 1. Complete | A. Information is free from bias in both selection and presentation of financial data. |
| 2. Neutral | B. Information should not contain errors or omissions in the description of the economic event and there are no errors in the process used to produce the financial information. |
| 3. Free from error | C. Includes all information that is necessary for the user to understand the underlying economic event bang depicted. |
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The relevance of providing information in financial statements is subject to the constraint of
a.Faithful representation
b.Cost-benefit
c.Comparability
d.Reliability
Statement 1: If financial information is to be useful, it must be relevant or faithfully represent what it purports to represent.Statement 2: Cost is a pervasive constraint on the reporting entity's ability to provide useful financial information.
a Statement 1 is true, Statement 2 is false
b Both are false
c Both are true
d Statement 1 is false, Statement 2 is true
1. Explain the objective of Financial Reporting
2. Explain cost constraint and materiality constraint by giving your own examples.
Chapter 2 Solutions
Intermediate Accounting - Myaccountinglab - Pearson Etext Access Card Student Value Edition
Ch. 2 - Prob. 2.1QCh. 2 - Prob. 2.2QCh. 2 - Why is a conceptual framework of accounting...Ch. 2 - Prob. 2.4QCh. 2 - Prob. 2.5QCh. 2 - Prob. 2.6QCh. 2 - Prob. 2.7QCh. 2 - When is financial information considered...Ch. 2 - Prob. 2.9QCh. 2 - Prob. 2.10Q
Ch. 2 - What is the recognition principle and when is an...Ch. 2 - What is the revenue recognition principle and when...Ch. 2 - Prob. 2.14QCh. 2 - When are expenses recognized under IFRS?Ch. 2 - How are transactions recorded under accrual...Ch. 2 - Prob. 2.17QCh. 2 - Prob. 2.1BECh. 2 - Objective of Financial Reporting. Explain the...Ch. 2 - Prob. 2.3BECh. 2 - Fundamental and Enhancing Characteristics....Ch. 2 - Prob. 2.5BECh. 2 - Prob. 2.6BECh. 2 - Prob. 2.7BECh. 2 - Fundamental and Enhancing Characteristics....Ch. 2 - Faithful Representation. Match the component of a...Ch. 2 - Prob. 2.10BECh. 2 - Prob. 2.11BECh. 2 - Capital Maintenance Adjustments, IFRS. Describe...Ch. 2 - Expense Recognition. Discuss the three main...Ch. 2 - Element Definitions. Identify whether the...Ch. 2 - Prob. 2.15BECh. 2 - Element Definitions, U.S. GAAP, IFRS. Identify...Ch. 2 - Prob. 2.17BECh. 2 - Measurement Bases. Match the measurement basis...Ch. 2 - Cash versus Accrual Bases of Accounting. The...Ch. 2 - Assumptions in Financial Reporting. Indicate the...Ch. 2 - Conceptual Framework. Noeleen Auto Mall, Ltd....Ch. 2 - Qualitative Characteristics. Referring to the...Ch. 2 - Prob. 2.3ECh. 2 - Cash versus Accrual Bases of Accounting. Top Notch...
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- What is meant by comparability when discussing Qualitative Characteristicsof Useful Financial Information:a. Information has predictive or confirmatory value.b. Information is reasonably free from error.c. Information that is measured and reported in a similar fashion acrosscompanies.d. Information is timely.arrow_forwardWhich of the following requires accounting information to be complete, neutral, and free from material error? a. Faithful representation concept b. Cost principle c. Economic entity assumption d. Going concern assumptionarrow_forwardWhich theory predict the facts but not assume any particular outcome? O a. Normative theory O b. Agency theory O C. Accounting Theory O d. Positive theoryarrow_forward
- Which of the following pars of items are the two fundamental qualitative characteristics of a useful financial information? a. Relevance and prudence b. Relevance and faithful representation c. Faithful representation and materiality d. Faithful representation and comparabilityarrow_forward2. Explain the following concept used in the preparation of financial statement i. Relevance ii. Reliability iii. Faithfull representation iv. Neutrality v. Completeness vi. Comparabilityarrow_forwardExplain what is meant by relevance, faithful representation, and comparability and how they make financial information useful by focusing on the distinguishing fundamental characteristics between useful information and information that is not useful or misleadingarrow_forward
- Under Qualitative Characteristics of Useful Financial Information, which ofthe following is a qualitative characteristic associated with faithfulrepresentation:a. Completenessb. Free from errorc. Neutralityd. All the abovearrow_forwardWhat qualitative characteristic defines, the underlying influence in the preparation of financial statements is the weighing of costs and benefits regarding the presentation of information A) Materiality Cost constraints Faithful representation D Going concernarrow_forwardThe fundamental qualitative characteristics that financial information must possess to be useful to theprimary users of general purpose financial reports—identified in the Conceptual Framework are‘relevance’ and ‘faithful representation’.Required:a) Provide one example where information is relevant but not faithfully represented. b) Provide one example where information is not relevant but is faithfully represented. c) Provide one example where information is relevant and faithfully represented. please expalin in your own words.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_forwardWhich of the following requires accounting information to be complete, neutral, and free from material error? Faithful representation concept Cost principle Economic entity assumption Going concern assumptionarrow_forwardDiscuss the four basic Assumptions that underline the financial Accounting Structures with example. b) Match the qualitative characteristics below with the following statements. I. Relevance VI. Comparability II.Faithful representation VII.Completeness III. Predictive value VIII.Neutrality IV.Confirmatory value IX.Timeliness V. Free from error X. Understandability (i) Quality of information that permits users to identify similarities in and differences between two sets of economic phenomena. (ii) Having information available to users before it loses its capacity to influence decisions. (iii) Information about an economic phenomenon that has value as an input to the processes used by capital providers to form their own expectations about the future.arrow_forward
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