Chapter 2 Solutions for Int. Accounting Kieso/Wiley Plus
CHAPTER 2
SOLUTIONS TO B EXERCISES
EXERCISE 2-1B (15–20 minutes)
(a) True.
(b) False – General-purpose financial reports helps users who lack the ability to demand all the financial information they need from an entity and therefore must rely, at least partly, on the information in financial reports.
(c) False – Standard-setting that is based on personal conceptual frameworks will lead to different conclusions about identical or similar issues. As a result, standards will not be consistent with one another, and past decisions may not be indicative of future ones.
(d) False – Information that is decision-useful to capital providers may also be useful to other users of financial reporting, who are not capital providers.
(e) False – An implicit assumption is that users need reasonable knowledge of business and financial accounting matters to understand the information contained in the financial statements.
(f) True.
EXERCISE 2-2B (15–20 minutes)
(a) False – The fundamental qualitative characteristics that make accounting information useful are relevance and faithful representation.
(b) False – Relevant information must also be material.
(c) False – prudence or conservatism generally is in conflict with the quality of neutrality and may lead to bias in financial reporting.
(d) False – Information that is relevant is characterized as having predictive or confirmatory value.
(e) False – Comparability also refers to comparisons of a firm over time (consistency).
(f) False – Enhancing characteristics relate to both relevance and faithful representation.
(g) True.
E2-3B (20–30 minutes)
(a)
Relevance.
(f)
Cost constraint.
(b)
Consistency. (g)
Neutrality.
(c)
Feedback value. (h)
Timeliness.
(d)
Relevance and faithful representation. (i)
Verifiability.
(e)
Neutrality.
(j)
Comparability.
E2-4B (15–20 minutes)
(a)
Faithful representation. (f)
Confirmatory value.
(b)
Neutrality. (g)
SOLUTIONS TO B EXERCISES
EXERCISE 2-1B (15–20 minutes)
(a) True.
(b) False – General-purpose financial reports helps users who lack the ability to demand all the financial information they need from an entity and therefore must rely, at least partly, on the information in financial reports.
(c) False – Standard-setting that is based on personal conceptual frameworks will lead to different conclusions about identical or similar issues. As a result, standards will not be consistent with one another, and past decisions may not be indicative of future ones.
(d) False – Information that is decision-useful to capital providers may also be useful to other users of financial reporting, who are not capital providers.
(e) False – An implicit assumption is that users need reasonable knowledge of business and financial accounting matters to understand the information contained in the financial statements.
(f) True.
EXERCISE 2-2B (15–20 minutes)
(a) False – The fundamental qualitative characteristics that make accounting information useful are relevance and faithful representation.
(b) False – Relevant information must also be material.
(c) False – prudence or conservatism generally is in conflict with the quality of neutrality and may lead to bias in financial reporting.
(d) False – Information that is relevant is characterized as having predictive or confirmatory value.
(e) False – Comparability also refers to comparisons of a firm over time (consistency).
(f) False – Enhancing characteristics relate to both relevance and faithful representation.
(g) True.
E2-3B (20–30 minutes)
(a)
Relevance.
(f)
Cost constraint.
(b)
Consistency. (g)
Neutrality.
(c)
Feedback value. (h)
Timeliness.
(d)
Relevance and faithful representation. (i)
Verifiability.
(e)
Neutrality.
(j)
Comparability.
E2-4B (15–20 minutes)
(a)
Faithful representation. (f)
Confirmatory value.
(b)
Neutrality. (g)