Chapter 1 Selected exercises

E1-1. Qualitative Characteristics

A. 1-relevance H. 12-comparability
B. 3-feedback value I. 13-consistency
C. 4-predictive value J. 2-reliability
D. 8-timeliness K. 11-representational faithfulness
E. 9-verifiability L. 7,14-benefits exceeds cost;
F. 1,2-relevance, reliability materiality
G. 10-neutrality M. 4-predictive value

E1-2. Principles and Assumptions

A. 11-materiality
B. 9-industry practice
C. 5-matching principle
D. 7-full disclosure principle
E. 6-historical cost principle
F. 1-going concern assumption
G. 4-periodicity assumption
H. 3-monetary unit assumption
I. 2-economic entity assumption

E1-3. Multiple Choice

1. (b)

2. (c)

3. (d)

4. (b)

5. (c)

6. (a)

E1-4. Conventions and Assumptions

A. Conservatism.
B. Periodicity or Time period assumption.
C. Economic entity assumption.
D. Materiality (and full disclosure).
E. Revenue recognition.
F. Full Disclosure


E1-6. Conventions, Assumptions, Constraints

A. 9 - Industry Practices
B. 5 - Matching
C. 7 - Full Disclosure
D. 6 - Historical cost
E. 1 - Going concern
F. 3 - Monetary unit
G. 2 - Economic entity
H. 4 - Periodicity
I. 10 - Revenue recognition

E1-11. True-False

A. False.
B. False.
C. False.
D. False.
E. False.
F. False.
G. True.

E1-12. Conceptual Framework

1. b
2. c
3. d
4. c
5. c

E1-13.

A. 10 F. 3
B. 12 G. 1
C. 4 H. 1
D. 11 I. 9
E. 2 J. 12
K. 3

E1-14.

A. 3
B. 2
C. 4
D. 5
E. 6
F. 1

E1-15.

1. a
2. c
3. d
4. c
5. d