Question

In: Accounting

Which of the following does NOT describe the fundamental quality relevance? Confirmative value Materiality Predictive value...

  1. Which of the following does NOT describe the fundamental quality relevance?
  1. Confirmative value
  2. Materiality
  3. Predictive value
  4. Completeness
  1. Which of the following is reported on a financial statement at a moment in time?
  1. Revenues
  2. Gains
  3. Assets
  4. Distributions to owners
  1. Which of the following describes the economic entity assumption?
  1. Company keeps its activities separate from its owners and other businesses
  2. Company will last long enough to fulfill objectives and commitments
  3. Money is the common denominator of economic activity
  4. Company can divide its economic activities into time periods
  1. Any facts of sufficient importance to influence the judgment and decisions of an informed reader should be included in the financial statements. Which of the following principles does this statement describe?
  1. Expense recognition
  2. Full disclosure
  3. Measurement
  4. Revenue recognition
  1. Which of the following is NOT an enhancing quality?
  1. Comparability
  2. Neutrality
  3. Timeliness
  4. Understandability

Solutions

Expert Solution

Answer is as follows:

1. d. completeness

Quality of relevace includes Confirmative value(past events information), Predictive value (predictions of possible future events and Materiality (able to make a difference in decision).

2. c. Assets

In balance sheet we present our financial condition with what we have and what we owe to others at a moment in time. It is a record of our current situation that point of time.

3. a. Company keeps its activities separate from its owners and other businesses.

Economic entity assumption is an accounting principle which separates the transactions undertaken by owner and the business.

4. b. Full disclosure

Full discosure principle requires business to report all necessary and relevant information which influences the judgement and decision of the reader of financial statements.

5. b. Neutrality

Enhancing qualities of accounting information are Comparability, Timeliness, Understandability and Verifiability.

ekkarill92 answered 1 year ago
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