Question

Modifying conventions include all of the following except:

Select one or more:

a. Cost-benefit.

b. Materiality.

c. Periodicity.

d. Conservatism.

Answer 1

Solution: Periodicity

Explanation: Modifying conventions include:

-- Cost-benefit: The modifying convention would relax some requirements of GAAP when the expected reporting cost is not more than the benefits of reporting it

-- Materiality: The modifying convention would relax some requirements of GAAP when the impact is not huge for influencing the decisions

-- Conservatism: If there are available choices of equally acceptable accounting methods, the company need to choose the method which is least likely to overstate assets or income