Conceptual Framework

What are the Statements of Financial Accounting Concepts intended to establish?

• Generally accepted accounting principles in financial reporting by business enterprises

• The meaning of “Present fairly in accordance with generally accepted accounting principles

• The objectives and concepts for use in developing standards of financial accounting and reporting

• The hierarchy of sources of generally accepted accounting principles

According to the FASB conceptual framework, the objectives of financial reporting for business enterprises are based on?

• Generally accepted accounting principles

• Reporting on management’s stewardship

• The need for conservatism

• The needs of the users of the information

According to the FASB conceptual framework, an entity’s revenue may result from

• A decrease in an asset from primary operations

• An increase in an asset from incidental transactions

• An increase in a liability from incidental transactions

• A decrease in a liability from primary operations

Identify which basic assumption of accounting is best described in :

The economic activities of FedEx Corporation are divided into 12-month periods for the purpose of issuing annual reports.

• Monetary Unit

• Periodicity

• Going Concern

• Economic Entity

Identify which basic assumption of accounting is best described in:

Solectron Corporation, Inc. does not adjust amounts in its financial statements for the effects of inflation

• Monetary Unit

• Periodicity

• Going Concern

• Economic Entity

Identify which basic assumption of accounting is best described in:

Walgreen Co. reports current and noncurrent classifications in its balance sheet.

• Monetary Unit

• Periodicity

• Going Concern

• Economic Entity

Identify which basic assumption of accounting is best described in:

The economic activities of General Electric and its subsidiaries are merged for accounting and reporting purposes.

• Monetary Unit

• Periodicity

• Going Concern

• Economic Entity

Identify which basic assumption of accounting is best described in:

Norfolk Southern Corporation reports revenue in its income statement when it is earned instead of when the cash is collected.

• Historical Cost

• Revenue Recognition

• Matching

• Full Disclosure

Yahoo, Inc. recognizes depreciation expense for a machine over the 2-year period during which that machine helps the company earn revenue.

• Revenue Recognition

• Matching

• Full Disclosure

• Historical Cost

Oracle Corporation reports information about pending lawsuits in the notes to its financial statements.

• Revenue Recognition

• Matching

• Full Disclosure

• Historical Cost