Chapter 2
Chapter 2
Chapter 2
2, verifiability is an ingredient
of the primary quality of
Relevance Reliability
a. Yes No
b. Yes Yes
c. No No
d. No Yes
4. 44 Information about different entities and about different periods of the same entity can be
prepared and presented in a similar manner. Comparability and consistency are related to which
of these objectives?
Comparability Consistency
a. Entities Entities
b. Entities Periods
c. Periods Entities
d. Periods Periods
8. 63 Proponents of historical cost ordinarily maintain that in comparison with all other valuation
alternatives for general purpose financial reporting, statements prepared using historical costs
are more
a. reliable.
b. relevant.
c. indicative of the entity's purchasing power.
d. conservative.
9. 65 Revenue is generally recognized when realized or realizable and earned. This statement
describes the
a. consistency characteristic.
b. matching principle.
c. revenue recognition principle.
d. relevance characteristic.
11. 80 The basic accounting concept that refers to the tendency of accountants to resolve
uncertainty in favor of understating assets and revenues and overstating liabilities and expenses
is known as the
a. conservatism constraint.
b. materiality constraint.
c. substance over form principle.
d. industry practices constraint.
12. 84 In matters of doubt and great uncertainty, accounting issues should be resolved by choosing
the alternative that has the least favorable effect on net income, assets, and owners' equity.
This guidance comes from the
a. materiality constraint.
b. industry practices constraint.
c. conservatism constraint.
d. full disclosure principle.