Conceptual Framework for Financial Reporting

The objective of financial reporting is the foundation of the Conceptual Framework.

Which of the following is NOT a qualitative characteristic of accounting information?

The Conceptual Framework provides a structure for developing accounting standards and helps to ensure that financial statements are ______ and ______.

Match the following elements of financial statements with their definitions:

What is the purpose of the Conceptual Framework for Financial Reporting?

Which of the following is a key concept in the Conceptual Framework that focuses on the ability of users to compare financial statements over time and across different companies?

The Conceptual Framework includes guidance on the recognition, measurement, and disclosure of financial information.

Explain the difference between historical cost and fair value.

Which of the following terms is NOT an unconventional financial term used by some technology companies to attract investors?

Hortonworks Inc. reported $100 million in revenues in 2014.

What is the term used for non-GAAP numbers that technology companies use to gauge future business performance?

Uber defines ______ as the total fares paid by customers.

Match the following terms with their definitions:

Which of the following is a key characteristic of an asset?

The term "asset" may be used to refer to both tangible objects and intangible rights or resources.

What is equity? What is it also known as?

Which of the following is NOT considered a basic assumption in financial reporting?

The Conceptual Framework identifies five basic assumptions for financial reporting.

What is the primary goal of a conceptual framework in accounting?

What is the primary advantage of using the historical cost principle for asset valuation?

The Conceptual Framework for Financial Reporting was published by the IASB in 2018.

The ______ principle requires companies to account for and report many assets and liabilities based on their acquisition price.

Match the basic accounting principles with their descriptions:

What are two examples of accounting scandals that highlighted the need for a conceptual framework?

Which measurement principle is generally used when companies select a valuation that reflects a trade-off between relevance and faithful representation?

The basic assumptions of accounting include the ______ assumption, which states that the business entity will continue to operate in the foreseeable future.

Using current selling price for valuation would be more accurate than using historical cost.

Match the following accounting principles with their descriptions:

Why is it problematic to use current selling price for asset valuation?

Principles-based accounting rules provide more detailed guidance than rules-based accounting.

What is the primary reason for advocating principles-based accounting rules?

Which of the following is NOT a current value basis for measuring assets and liabilities?

Current values of assets and liabilities do not reflect changes in amounts since the previous measurement date.

What is the revenue recognition principle? Explain in your own words.

A company has a ______ obligation when it agrees to perform a service or sell a product to a customer.

Match the accounting concepts with their appropriate definitions:

According to the revenue recognition principle, when should Klinke Cleaners recognize revenue for its cleaning services?

Companies record liabilities on a cost basis.

Explain why current value accounting is considered a more relevant measure than historical cost accounting.

What is the main purpose of the full disclosure principle?

The financial statements always contain all the information needed to understand a company's performance.

What are the three places users can find information about a company's financial position, income, cash flows, and investments?

Good disclosure does not cure _____ accounting.

Match the type of financial statement with its purpose:

Which of the following is NOT a financial statement mentioned?

Disclosure in the notes can substitute for proper accounting.

Information in the notes does not always have to be _____ or qualify as an element.