EXERCISES Aspects of the FASB\'s Conceptual Framework Determine whether the foll
ID: 2331867 • Letter: E
Question
EXERCISES Aspects of the FASB's Conceptual Framework Determine whether the following statements are true or false. If a statement is false, explain why. 1. Comprehensive income includes changes in equity resulting from distributions to owners. 2. Confirmatory value and predictive value are 3. The tendency to recognize favorable events early is an example of conservatism 4. The conceptual framework focuses primarily on the needs of internal users of financial information. s. The eight Statements of Financial Accounting Concepts are considered part of generally accepted Exercise 1-1 accounting principles The overriding objective of financial reporting is to provide information for making economic decisions 6. 7. The term recognition is synonymous with the term disclosure 8 Once an accounting method is adopted, it should never be changed.Explanation / Answer
1.TRUE.
when you have the comprehensive income the equity changed with the distribution to owners
2.TRUE
confirmatory value gives you conformation on what you have predicted. Where as predictive value gives you figure anticipations .both are the characteristics of relevant information.
3.TRUE.
conservatism principles tells you only you can anticipate possible events. It is the one of the acconting principle.
4 TRUE
The conceptual framework is needed for internal control and also primarily focused on internal users and financial information
5.FALSE
the eight financial statements are not the part of the GAAP. and other financial rules are also needed
6.TRUE
the objective of the financial reporting is to provide information to various parties who are interested in it.
7.TRUE
the term recognition is the synonymous to disclosure.
Because recognition tells an item included in the subtotals where as the disclosure tells you the items are appears in words and numbers.
8.FALSE
once an acconting method is adopted it should never be changed as per the consistency principle. But there are many reasons for changing. Under full disclosure you can change the acconting principle.
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