Conceptual Framework for Financial Accounting

Part-A
Brief Questions
3rd Part

17.What is percentage of completion method?
Ans:A method of recognizing revenue and income on a construction project on the basis of costs incurred during the period on the basis costs for the entire project.

18.What is Relevance?
Ans:The quality of information that indicates the information makes a difference in a decision.

19.What is revenue recognition principle?
Ans:The principle that revenue should be recognized in the accounting period in which it is earned (generally at the point of sale)

20.What is Time period assumption?
Ans:The assumption that the economic life of a business can be divided into artificial time periods.

21.What is Financial Accounting Standards Board (FASB)?
Ans:A private organization that establishes generally accepted accounting principles.

22.What is Generally accepted accounting principles(GAAP)?
Ans:Common standards that indicate how to report economic events.

23.What is Securities and Exchange Commission (SEC)?
Ans:A governmental agency that requires companies to file financial reports in accordance with generally accepted accounting principles.

24.What elements comprise the FASB's conceptual framework?
Ans:(1)Objectives of Financial Reporting.
       (2)Qualitative Characteristics of Accounting Information.
       (3)Elements of Financial Statements
       (4)Operating guidelines (assumptions,principles and constraints)