Question

tal and enhancing qualitative characteristics of accounting information. The conceptual framework indicates the desired Several constraints impede achieving these desired characteristics. Answer each of the following questions related to these characteristics and constraints Which component would allow a large company to record the purchase of a $120 printer as an expense rather than capitalizing the printer as an asset? Donald Kirk, former chairman of the FASB, once noted that there must be public confidence that the standard-setting system is credible, that selection of board members is based on merit and not the influence of special interestsWhich characteristic is implicit in Mr. Kirk's statement? Alled Appliances, Inc., changed its revenue recognition policies. Which characteristic is jeopardized by this change? National Bancorp, a publicly traded company, files quarterly and annual 2. 3. 4. financial statements with the SEC. Which characteristic is relevant to the 5. In general, relevant information possesses which qualities? 6 phenomenon it purports to represent, information possesses which timing of these periodic filings? When there is agreement between a measure or description and the characteristic? Jeff Brown is evaluating two companies for future investment potential Jeffs task is made easier because both companies use the same accounting methods when preparing their financial statements. Which 7. characteristic does the information Jeff will be using possess? A company should disclose information only if the perceived benefits of the disclosure exceed the costs of providing the information. Which constraint does this statement describe? 8

Answer 1

1	Cateriality
2	Neutrality
3	Consistency
4	Timeliness
5	Predictive value and/or confirmatory value
6	Faithful representation
7	Comparability
8	Cost effectiveness