Question Details

Which of the following best describes the cost-benefit constraint 



1.	Charging off the cost of a wastebasket with an estimated useful life of 10 years as an expense of the period when purchased is an example of the application of the
a.	consistency characteristic.
b.	matching principle.
c.	materiality constraint.
d.	historical cost principle.

	2.	Which of the following statements about materiality is not correct?
a.	An item must make a difference or it need not be disclosed.
b.	Materiality is a matter of relative size or importance.
c.	An item is material if its inclusion or omission would influence or change the judgment of a reasonable person.
d.	All of these are correct statements about materiality.

3.	The International Accounting Standards Board- conceptual framework includes a cost-benefit constraint.  Which of the following best describes the cost-benefit constraint ?
a.	The benefits of the information must be greater than the costs of providing it.
b.	Financial information should be free from cost to users of the information.
c.	Costs of providing financial information are not always evident or measurable, but must be considered.
d.	All of the choices are correct.

4.	The International Accounting Standards Board- (IASB) conceptual framework includes a cost-benefit constraint.  Which of the following is true regarding this constraint?
a.	Benefits are more difficult to quantify than costs.
b.	The IASB seeks input on costs and benefits as part of their due process.
c.	Benefits to preparers may include access to capital at a lower cost.
d.	All of the choices are correct.

5.	The International Accounting Standards Board- (IASB) conceptual framework includes a materiality constraint.  Which of the following is true regarding this constraint?
a.	The IASB- rule for materiality is any item under 5% of net income is considered immaterial.
b.	Materiality factors into both internal and external accounting decisions.
c.	An item is immaterial if its inclusion or omission would influence or change the judgment of a reasonable person.
d.	All of the choices are correct.
6.	The International Accounting Standards Board- (IASB) conceptual framework 
a.	Includes the concept of prudence or conservatism which means when in doubt, choose the solution that will be least likely to overstate assets or income and/or understate liabilities or expenses.
b.	Excludes the concept of prudence or conservatism because it is inconsistent with neutrality, which encompasses freedom from bias.
c.	Includes the concept of prudence or conservatism which means when in doubt, choose the solution that will be least likely to understate assets or income and/or overstate liabilities or expenses.
d.	Includes the concept of prudence or conservatism as a desirable, but not required, quality of financial reporting information.

7.	The International Accounting Standards Board- (IASB) conceptual framework includes which of the following constraints?
a.	Prudence
b.	Conservatism
c.	Cost
d.	All of the choices are constraints in the IASB- conceptual framework.




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