Instructions Summary:The Conceptual Framework (CF) allows for the systematic adaptation of accounting standards to a changing business environment. FASB uses the CF to aid in an organized and consistent development of new accounting standards. The CF outlines the objectives of financial reporting and the qualities of good accounting information, precisely defines commonly used terms such as asset and revenue, and provides guidance about appropriate recognition, measurement, and reporting. Understanding the terminology associated with the framework is imperative.Download the rubric and answer each of the 20 questions as indicated in the assignment instructions. You will only submit the Unit 6 assignment answer sheet to the DropboxReview complete Unit 6 assignment details and rubrics.
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AC499: Bachelors Capstone in Accounting | Unit 7
Unit 7 Assignment Answer Sheet
Submit this document to the Dropbox.
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Complete the answers as indicated for each of the Problems, 1 through 20, and submit the Unit 6 Assignment
Dropbox by the end of the unit. Type in the appropriate Letter answer ONLY, for Questions 1 – 20.
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AC499: Bachelors Capstone in Accounting | Unit 7
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AC499: Bachelors Capstone in Accounting | Unit 6
Unit 6 Assignment: GAAP Applications – Conceptual Framework of
Accounting
Assignment:
The Conceptual Framework (CF) allows for the systematic adaptation of accounting standards to a changing
business environment. FASB uses the CF to aid in an organized and consistent development of new
accounting standards. The CF outlines the objectives of financial reporting and the qualities of good accounting
information, precisely defines commonly used terms such as asset and revenue, and provides guidance about
appropriate recognition, measurement, and reporting. Understanding the terminology associated with the
framework is imperative.
Submission Instructions:
Select the best answer for each of the following questions and fill out and the Answer Sheet. Submit only the
Answer Sheet to the Unit 6 Dropbox by the end of the unit.
Question # 1 – Accruing net losses on non-cancelable purchase commitments for inventory is an example of
the accounting concept of:
a. Conservatism
b. Realization
c. Consistency
d. Materiality
Question # 2 – The information provided by financial reporting pertains to:
a. Individual companies, rather than to industries or the economy as a whole or to consumers.
b. Individual companies and industries, rather than to the economy as a whole or to consumers.
c. Individual companies and the economy as a whole, rather than to industries or to consumers.
d. Individual companies, industries, and the economy as a whole, rather than to consumers.
Question # 3 – According to Statement of Financial Accounting Concepts No. 2, an interim earnings report is
expected to have which of the following?
Predictive Feedback
Value Value
a. No
No
b. Yes
Yes
c. Yes
No
d. No
Yes
Question # 4 – A patent purchased in 2007 and being amortized over a 10 years was determined to be
worthless in 2010. The write-off of the asset in 2010 is an example of which of the following principles?
a. Associating cause and effect
b. Immediate recognition
c. Systematic and rational allocation
d. Objectivity
AC499: Bachelors Capstone in Accounting | Unit 6
Question # 5 – An accrued expense is an expense:
a. Incurred but not paid
b. Incurred and paid
c. Paid but not incurred
d. Not reasonably estimable
Question # 6 – Which of the following accounting concepts states that an accounting transaction should be
supported by sufficient evidence to allow two or more qualified individuals to arrive at essentially similar
measures and conclusions?
a. Matching
b. Verifiability
c. Periodicity
d. Stable monetary unit
Question # 7 – Which of the following is considered a pervasive constraint by Statement of Financial
Accounting Concepts No. 2?
a. Benefits/costs
b. Conservatism
c. Timeliness
d. Verifiability
Question # 8 – The valuation of a promise to receive cash in the future at present value on the financial
statements of a company is valid because of the accounting concept of:
a. Entity
b. Materiality
c. Going concern
d. Neutrality
Question # 9 – Under Statement of Financial Accounting Concepts (SFAC) No. 2, which of the following
relates to both relevance and reliability?
a. Timeliness
b. Neutrality
c. Feedback value
d. Consistency
Question # 10 – Under SFAC No. 6, which of the following, in the most precise sense, means the process of
converting noncash resources and rights into cash or claims to cash?
a. Allocation
b. Recordation
c. Recognition
d. Realization
Question # 11 – FASB concluded that the most general objective of financial reporting is to:
a. provide information useful in the decisions made by external users
b. meet the needs of internal users
AC499: Bachelors Capstone in Accounting | Unit 6
c. provide information about an entity’s earnings
d. provide information about an entity’s cash flows
Question # 12 – Which qualitative characteristic is an ingredient of relevance?
a. verifiability
b. timeliness
c. neutrality
d. representational faithfulness
Question # 13 – According to the FASB hierarchy of qualitative characteristics, the two primary qualities
making accounting information useful are:
a. understandability and decision usefulness
b. relevance and reliability
c. verifiability and neutrality
d. predictive value and feedback value
Question # 14 – Which qualitative characteristic is an ingredient of reliability?
a. predictive value
b. feedback value
c. timeliness
d. neutrality
Question # 15 – Representational Faithfulness is a relationship between the reported accounting
measurements or descriptions and the economic resources, obligations, and the transactions and events
causing changes in these items. This is important because the:
a. bias associated with financial measurements can be reduced.
b. validity of accounting data is an important economic resource.
c. accounting information is relevant for all decisions.
d. financial information is faithfully reported in the accounting records.
Question # 16 – Which of the following are considered secondary characteristics of accounting information?
a. verifiability and feedback value
b. predictive value and timeliness
c. comparability and consistency
d. representational faithfulness and neutrality
Question # 17 – Which of the following items would be a violation of materiality?
a. a company did not separately report an unusual gain of $50,000. Its income from operations was
$5,000,000
b. a company expensed the purchase of pencil sharpeners that have an estimated useful life of three
years
c. $25,000 illegal bribe to a foreign official was not separately disclosed in the annual report
d. a $5,000 expenditure to improve a building that originally cost $5,000,000 was expensed
Question # 18 – Revenue may be recognized by an entity at the completion of production during an accounting
period:
AC499: Bachelors Capstone in Accounting | Unit 6
a.
b.
c.
d.
only if full payment was received from the buyer before production began
when no specific point of sale can be identified
when there is a fixed selling price, and there are no limitations on the amount that can be sold
when collectability is highly uncertain
Question # 19 – Which one of the following assumptions or principles most logically supports the preparation
of a single set of consolidated financial statements that combine the financial information of several whollyowned but separately-identifiable businesses?
a. historical cost
b. industry practices
c. entity
d. materiality
Question # 20 – The principle of revenue recognition results in:
a. recording revenue in the income statement.
b. recording realized revenue when it is earned.
c. measuring relevant and reliable information whenever a transaction has occurred.
d. assuring the existence of all amounts recorded as net income.
Once completed, submit your assignment to the Unit 6 assignment Dropbox. The assignment is due Tuesday
11:59 p.m. ET of their assigned unit.
AC499 Unit 6 Assignment: GAAP Applications – Conceptual Framework of
Accounting
Item criteria:
Question # 1 – Conceptual Framework Principle
Question # 2 – Reporting & Conceptual Framework
Question # 3 – SFACs
Question # 4 – Conceptual Framework Principle
Question # 5– Identification of Concepts
Question # 6 – Transactions & the Framework
Question # 7 – SFACs
Question # 8 – Conceptual Framework Principle
Question # 9 – Conceptual Framework Principle
Question # 10 – Conceptual Framework Principle
Question # 11 – Financial Reports & Framework
Points
Possible
Points
Earned
AC499: Bachelors Capstone in Accounting | Unit 6
Question # 12 – Characteristics / Report Relevance
Question # 13 – Report Qualitative Characteristics
Question # 14 – Conceptual Framework Principle
Question # 15– Determine importance of principles
Question # 16 – Determine importance of principles
Question # 17 – Examine importance of Materiality
Question # 18 – Revenue Recognition Principles
Question # 19 – Conceptual Framework Principle
Question # 20 – Revenue Recognition Principles
Any Deductions (Format incorrect or Late Penalty)
Total Points
40
…
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