Which of the following terms best describes information in financial statements that is neutral

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Part 1: The framework of financial reporting

Chapter 2: Key accounting concepts

Multiple choice questions

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Problem 3-1 (IAA)

1.What are the attributes that make the information

provided in the financial statements useful to the

readers?

a.Qualitative characteristics of financial

information

b. Quantitative characteristics of financial

information

c.Elements of financial statements

d.Objectives of financial reporting

2.Qualitative Characteristics

a. are considered either fundamental or

enhancing.

b.contribute to the decision-usefulness of

financial reporting information.

c.distinguish better information from inferior

information for decision-making purposes.

d.All of the choices are correct.

3.The fundamental qualitative characteristics are

a.Relevance and faithful representation

b.Relevance, faithful representation and

materiality

c.Relevance and reliability

d.Faithful representation and materiality

4.Accounting information is considered relevant when

it

a.Can be depended on to represent the economic

conditions and events that is intended to

represent.

b.Is capable of making a difference in a decision.

c.Is understandable by reasonably informed users

of accounting information.

d.Is verifiable and neutral.

5.The ingredients of relevant financial information are

a.Predictive value and confirmatory value

b.Predictive value, confirmatory value and

timeliness

c.Predictive value, confirmatory value and

materiality

d.Predictive value, confirmatory value, timeliness

and materiality

6.What is the quality of information that gives

assurance that is reasonably free of error and bias?

a.Relevance

b.Faithful representation

c.Verifiability

d.Neutrality

7.Which of the following is the best description of

“faithful representation” in relation to information

in financial statements?

a.Influence on the economic decision of users

b.Inclusion of a degree of caution

c.Freedom from material error

d.Comprehensibility to users

8.To achieve faithful representation, the financial

statements

a.Must have predictive and confirmatory value.

b.Must be complete, neutral and reasonably free

from error.

c.Are understandable, comparable, verifiable and

timely.

d.Must possess all of these.

9.The financial accounting information is directed

toward the common needs of users and is

independent of presumptions about particular

needs and desires of specific users.

a.Relevance

b.Verifiability

c.Neutrality

d.Completeness

10. In the event of conflict between the economic

substance of a transaction and the legal form, the

economic substance shall prevail.

a.Form over substance

b.Substance over form

c.Relevance

d.Completeness

Problem 3-2 (IAA)

1. The enhancing qualitative characteristics of

financial information are

a.Comparability and understandability

b.Verifiability and timeliness

c.Comparability, understandability and

verifiability

d.Comparability, understandability, verifiability

and timeliness

2.Financial information exhibits consistency when

a. Accounting procedures are adopted which

smooth net income and make results consistent

between years.

b.Gains and losses are shown separately on the

income statement.

c.Accounting entities give similar events the same

accounting treatment each period.

d.Expenditures are reported as expenses.

3.When information about two different entities

engaged in the same industry has been prepared

and presented in similar manner, the information

exhibits the enhancing qualitative characteristic of

a.Relevance

b.Faithful representation

c.Consistency

d.Comparability

4.The characteristic that is demonstrated when a high

degree of consensus can be secured among

independent measures using the same

measurement method is

a.Relevance

b.Understandability

c.Verifiability

d. Neutrality

Which is the best description of faithful representation in relation to information in financial statements?

Which of the following best describes financial statements?

Which of the following qualitative characteristics relates to the fact that an information is complete neutral and free from error?

Which quality of financial information is described as being complete neutral and free from error?