Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Question
Chapter 1, Problem 1.12BE
To determine
To identify: Whether the given items are a characteristic of a principles-based (P) or rules-based (R) accounting system.
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The techniques and practices of management accounting are usually constrained by:
Select one:
O A. Accounting standards issued by the accountancy profession
O B. Needs of internal users
O C. Needs of shareholders
O D. None of the above
Which of the following statements is incorrect?
Select one:
a.
Reports produced using management accounting must follow GAAP.
b.
The information gathered from management accounting is not required by law.
c.
The practice of management accounting is fairly flexible.
d.
Management accounting focuses mainly on the internal user.
The qualitative characteristics that make accounting information useful for decision-making purposes are as follows.
Relevance
Neutrality
Verifiability
Faithful representation
Completeness
Understandability
Predictive value
Timeliness
Comparability
Confirmatory value
Materiality
Free from error
Instructions
Identify the appropriate qualitative characteristic(s) to be used given the information provided below.
a. Qualitative characteristic being employed when companies in the same industry are using the same accounting principles.
b. Quality of information that confirms users’ earlier expectations.
c. Imperative for providing comparisons of a company from period to period.
d. Ignores the economic consequences of a standard or rule.
e. Requires a high degree of consensus among individuals on a given measurement.
f. Predictive value is an ingredient of this fundamental quality of information.
g. Four qualitative characteristics that are…
Chapter 1 Solutions
Intermediate Accounting (2nd Edition)
Ch. 1 - Prob. 1.1QCh. 1 - Prob. 1.2QCh. 1 - How is the allocation of capital linked to the...Ch. 1 - Prob. 1.4QCh. 1 - What is the function of the accounting standard...Ch. 1 - Can U.S. companies listen on U.S. stock exchanges...Ch. 1 - Prob. 1.7QCh. 1 - Prob. 1.8QCh. 1 - Prob. 1.9QCh. 1 - Prob. 1.10Q
Ch. 1 - Prob. 1.1BECh. 1 - Prob. 1.2BECh. 1 - Financial Statement Users and Other Parties...Ch. 1 - Prob. 1.4BECh. 1 - Prob. 1.5BECh. 1 - Economic Entity. What is an economic entity?Ch. 1 - Prob. 1.7BECh. 1 - Prob. 1.8BECh. 1 - Prob. 1.9BECh. 1 - Prob. 1.10BECh. 1 - Prob. 1.11BECh. 1 - Prob. 1.12BECh. 1 - Financial Accounting. Define financial accounting...Ch. 1 - Prob. 1.2ECh. 1 - Convergence of Accounting Standards, IFRS Vikram...Ch. 1 - History of Standard Setting in the United States....Ch. 1 - Prob. 1.5ECh. 1 - Prob. 1.6ECh. 1 - Rules-versus Principles-Based Accounting. Review...
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Similar questions
- Which of the following statements is incorrect? The practice of management accounting is fairly flexible. The information gathered from management accounting is not required by law. Management accounting focuses mainly on the internal user. Reports produced using management accounting must follow GAAP.arrow_forwardThe following is a list of accounting assumptions and principles that have had an important impact on the development of generally accepted accounting principles and statements describing certain accounting practices. A. Reporting entity B. Going concern C. Period of time D. Historical cost E. Monetary unit F. Recognition G. Accrual accounting H. Revenue recognition I. Expense recognition J. Conservatism Required: Select the accounting assumption or principle that justifies each accounting practice and select the appropriate letter on each statement. 1. To provide timely information, companies prepare and report financial statements at the end of each year. 2. Appropriate recognition when a company consumes economic resources in conducting business operations. 3. Accounting measurements for U.S. companies are reported in dollars. 4. The financial statements represent the business, rather than its owners. 5. In the absence of evidence to the contrary, the business can be reasonably…arrow_forwardWhich of the following is not a fundamental quality of useful accounting information? Group of answer choices Faithful representation. Relevance. Faithful representation and Relevance. Materialityarrow_forward
- Which of the following is a fundamental characteristic of accounting information? Select one: O A. Predictive Value O B. Completeness OC. Faithful Representation O D. Comparability Tin Finisharrow_forwardHow does the accounting conceptual framework apply to the following IAS? Or how does the conceptual framework relate to the following accounting standards? 1. IAS 1 2. IAS 21 3. IAS 8 Any explanation will be highly appreciated. Thank you!arrow_forwardBetween Principles- Based and Rules-Based Accounting Standards, which would you use and do you think that this is the right way to create accounting standards?arrow_forward
- Which of the following statements is incorrect?A. The practice of management accounting is fairly flexible.B. The information gathered from management accounting is not required by law.C. Management accounting focuses mainly on the internal user.D. Reports produced using management accounting must follow GAAP.arrow_forward"Generally accepted accounting principles (GAAP) assist the development of management accounting systems." Do you agree? Explain. Question content area bottom Part 1 A. No. Although GAAP applies to internal accounting reports, managers rarely use it to develop management accounting systems. B. Yes. GAAP applies only to internal accounting reports. Therefore, managers must develop management accounting systems to comply with GAAP. C. No. GAAP applies to financial reporting for external users. Internal accounting reports are not restricted by GAAP. D. Yes. GAAP applies to internal accounting reports as well as financial reporting for external users. Managers must use GAAP in the development of all accounting systems.arrow_forwardWhich of the following statements is incorrect? a.Management accounting focuses mainly on the internal user. b.The information gathered from management accounting is not required by law. c.The practice of management accounting is fairly flexible. d.Reports produced using management accounting must follow GAAP.arrow_forward
- The following are basic characteristics of management accounting, except A. It is future-oriented. B. It is used by both the external and internal stakeholders C. It may use non-financial data or information D. It complies with generally accounting principles. (choose letter only)arrow_forwardWhich of the following is not an objective of the conceptual framework? O a. Provides guidance for transactions not addressed in existing accounting standards O b. Enables implementation of one universal set of accounting standards O c. Enables consistency of qualitative characteristics in financial reports O d. Addresses the common needs of users of financial reportsarrow_forwardAccounting information provides useful information about business transactions and events. Those whoprovide and use financial reports must often select and evaluate accounting alternatives. The Conceptual Framework examines the characteristics of accounting information that make it useful for decision-making. It also points out that various limitations inherent in the measurement and reporting process may necessitate trade-offs or sacrifices among the characteristics of useful information.For each of the following pairs of information characteristics, provide a hypothetical situation in which inwhich one of the characteristics may be sacrificed in return for a gain in the other. Explain the situationand criterion should be used to evaluate trade-offs between information characteristics? give your opinionsthati) Relevance and faithful representation.ii) Comparability and consistency.iii) Relevance and consistency.iv) Relevance and understandability.arrow_forward
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