Ch 2 Wrong Answers

Question 0

Ignores the economic consequences of a standard or rule?

Answer 0

Neutrality

Question 1

Imperative for providing comparisons of company from period to period, which qualitative characteristic?

Answer 1

Consistency (comparability)

Question 2

4 qualitative characteristics related to both relevance and faithful representation?

Answer 2

Verifiability
Timeliness
Understand ability
Comparability

Question 3

Issuance of interim reports is an example of what enhancing quality of relevance?

Answer 3

Timeliness

Question 4

Includes all changes in equity during period, except those resulting from investments by owner’s and distributions to owners.
Name the element?

Answer 4

Comprehensive income

Question 5

Allocates expenses to revenues in proper period.

Name the assumption, principle or constraint?

Answer 5

Expense recognition principle

Question 6

Rationale why plant assets are not reported at liquidation value (do not use historical cost principle). Identify the accounting assumption, principle or constraint.

Answer 6

Going concern assumption

Question 7

Intangible assets are capitalized and amortized over periods benefited. What is the assumption, principle or constraint?

Answer 7

Expense recognition principle

Question 8

The use of consolidated statements is justified. What assumption, principle or constraint is this an example of?

Answer 8

Economic entity assumption

Question 9

An allowance of doubtful accounts is established. What assumption, principle or constraint is this an example of?

Answer 9

Measurement principle (fair value)