Accounting

Accounting

E2-2

(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 – Information that is relevant is characterized as having predictive or confirmatory value.
(d )False – Comparability also refers to comparisons of a firm over time (consistency).
(e) False – Enhancing characteristics relate to both relevance and faithful representation.
(f) True.

E2-3

(a) Confirmatory Value.  
(b) Cost Constraint.
(c) Neutrality.
(d) Comparability (Consistency).  
(e) Neutrality.  
(f) Relevance and Faithful Representation.
(g) Timeliness.
(h) Relevance.
(i) Comparability.
(j) Verifiability.

E2-5

(f)             Assets
(b) Liabilities
(i) Equity
(c) Investment by owners
(k)(d) Distribution to owners
(l)(g)(e)(c) Comprehensive income
(j)(h) Revenue
(h) Expenses
(a) Gain
(a) Losses

E2-7

(a) The stakeholders are investors, creditors, mainly   the users of financial statements, current and future.

(b) Some things to consider are Honesty and integrity of financial reporting, job protection, and profit.

(c) Applying the expense recognition principle and recording expense during the plant’s life, or not applying it. That is, record the mothball costs in the future.

(d) The major question may be whether or not the expense of mothballing can be estimated properly so that the integrity of financial reporting is maintained. Applying the expense recognition principle will result in lower profits and possibly higher rates for consumers. Could this cost anyone his or her job? Will investors and creditors have more useful information? On the other hand, failure to apply the matching principle means higher profits, lower rates, and greater potential job security.

CA2-11

(a) The stakeholders are investors, creditors, mainly   the users of financial statements, current and future....