Conceptual Framework for Financial Accounting

Part-A
Brief Questions
4th Part

25.Indicate which of the following items is (are) included in the FASB's conceptual framework.(Use 'yes' or 'No'  to answer this question.)
(a) Qualitative characteristics of accounting information.
(b)Analysis of financial statement ratios
(c)Objectives of financial reporting.
Ans: (a) Yes (b)No (c) Yes.

26.What are the objectives of financial Reporting?
Ans:(a)Useful in making investment and credit decision.
       (b)Helpful in assessing future cash flows
       (c)Economic Resources (Assets,Claims etc).

27.Which of the following is not an objective of financial reporting?
     (a)Provide information that is useful in investment and credit decisions.
     (b)Provide information about economic resources,claims to those resources and changes in them.
     (c)Provide information that is useful in assessing future cash flows.
     (d)Provide information on the liquidation value of a business.(ANS)

28.Identify the Qualitative Characteristics of Accounting Information.
Ans:Primary Qualities:Relevance & Reliability.
       Secondary Qualities:Comparability & Consistency.

29.The primary criterion by which accounting information can be judged is
(a)Consistency;
(b)Predictive Value;
(c)decision-usefulness; (ans)
(d)comparability.
Ans:Because, decision-usefulness is a primary criterion of accounting information.

30.Verifiability is an ingredient of:_____________________________
                                  Reliability                                                Relevance
a.                                 Yes                                                           Yes
b.                                 No                                                           No
c.                                Yes                                                            No
d.                                 No                                                           Yes
Ans:c. Because,reliability contains verifiability.

31.The standard that is used in making financial statements universally acceptable is:
Ans:GAAP.

32.What is meant by Generally accepted accounting principles?
Ans:A set of standards and rules that are recognized as a general guide for financial reporting.