Question

E2.2 (LO 2,5) (Qualitative Characteristics) The conceptual framework identifies the fundamental and enhancing qualitative characteristics that make accounting information useful. Instructions Answer the following questions related to these qualitative characteristics. a. Which quality of financial information makes it possible for users to confirm or correct prior expectations? b. Identify some of the trade-offs and constraints in financial reporting. c. The U.S. Securities and Exchange Commission chairman once noted that, if it becomes accepted or expected that accounting principles are determined or modified in order to achieve goals that do not involve economic measurement, we risk a serious loss of confidence in the credibility of our financial information system. Which qualitative characteristic of accounting information should ensure that this situation will not occur? d. Milner Corp. chooses to account for a transaction based simply on its legal form. Is this acceptable? e. Companies in the mining industry defer losses on their properties because recognizing such losses immediately could have adverse economic consequences for the industry. Which qualitative characteristic of accounting information is not followed? f. Only Once Ltd. provides overly complicated descriptions and explanations in its statement notes and provides only aggregated totals on the face of its financial statements. Which qualitative characteristic of accounting information is not followed? g. Baskins does not issue its first-quarter report until after the second quarter's results are reported. Which qualitative characteristic of accounting information is not followed? h. Predictive value is an ingredient of which qualitative characteristic of useful information? 1. Vittorio Inc. is the only company in its industry to depreciate its plant assets on a straight-line basis. Which qualitative characteristie is not present? Ch 4 select proble.pdf - 9R OR A Pa

Answer 1

Ans. a: It is relevance.

Ans. b: Relevance and Verifiability

Ans. c: Representational faithfulness and understandability.

Ans. d: No, because there should be substance over form in business transactions.

.