Concept of conservatism.

Question

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Answer 1

Question

Chapter 5, Problem 5.8C

a)

To determine

To define : Concept of conservatism.

b)

To determine

To define : Effect of conservatism on financial reporting.

c)

To determine

To state : Relevance and faithfulness of information provided by entities which follow the concept of conservatism in accounting.

d)

To determine

To state : Consistency between concept of conservatism and concept of physical capital maintenance.

e)

To determine

To state : Consistency between concept of conservatism and concept of financial capital maintenance

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Economic consequences of accounting standard-setting means: a. standard-setters must give first priority to ensuring that companies do not suffer any adverse effect as a result of a new standard. b. standard-setters must ensure that no new costs are incurred when a new standard is issued. c. the objective of financial reporting should be politically motivated to ensure acceptance by the general public. d. accounting standards can have detrimental impacts on the wealth levels of the providers of financial information.

Explain what is meant by adverse economic consequences of new or changed accounting standards.

Economic consequences of accounting standard-setting means:a. standard-setters must give fi rst priority to ensuring that companies do not suffer any adverseeffect as a result of a new standard.b. standard-setters must ensure that no new costs are incurred when a new standard is issued.c. the objective of financial reporting should be politically motivated to ensure acceptance by thegeneral public.d. accounting standards can have detrimental impacts on the wealth levels of the providers of financialinformation.

Answer 2

Question

Chapter 5, Problem 5.8C

a)

To determine

To define : Concept of conservatism.

b)

To determine

To define : Effect of conservatism on financial reporting.

c)

To determine

To state : Relevance and faithfulness of information provided by entities which follow the concept of conservatism in accounting.

d)

To determine

To state : Consistency between concept of conservatism and concept of physical capital maintenance.

e)

To determine

To state : Consistency between concept of conservatism and concept of financial capital maintenance

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Answer 3

Question

Chapter 5, Problem 5.8C

a)

To determine

To define : Concept of conservatism.

b)

To determine

To define : Effect of conservatism on financial reporting.

c)

To determine

To state : Relevance and faithfulness of information provided by entities which follow the concept of conservatism in accounting.

d)

To determine

To state : Consistency between concept of conservatism and concept of physical capital maintenance.

e)

To determine

To state : Consistency between concept of conservatism and concept of financial capital maintenance

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Answer 4

Question

Chapter 5, Problem 5.8C

a)

To determine

To define : Concept of conservatism.

b)

To determine

To define : Effect of conservatism on financial reporting.

c)

To determine

To state : Relevance and faithfulness of information provided by entities which follow the concept of conservatism in accounting.

d)

To determine

To state : Consistency between concept of conservatism and concept of physical capital maintenance.

e)

To determine

To state : Consistency between concept of conservatism and concept of financial capital maintenance

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Answer 5

Chapter 5, Problem 5.8C

a)

To determine

To define : Concept of conservatism.

b)

To determine

To define : Effect of conservatism on financial reporting.

c)

To determine

To state : Relevance and faithfulness of information provided by entities which follow the concept of conservatism in accounting.

d)

To determine

To state : Consistency between concept of conservatism and concept of physical capital maintenance.

e)

To determine

To state : Consistency between concept of conservatism and concept of financial capital maintenance

Answer 6

Chapter 5, Problem 5.8C

a)

To determine

To define : Concept of conservatism.

Answer 7

Chapter 5, Problem 5.8C

a)

To determine

To define : Concept of conservatism.

Answer 8

b)

To determine

To define : Effect of conservatism on financial reporting.

Answer 9

b)

To determine

To define : Effect of conservatism on financial reporting.

Answer 10

c)

To determine

To state : Relevance and faithfulness of information provided by entities which follow the concept of conservatism in accounting.

Answer 11

c)

To determine

To state : Relevance and faithfulness of information provided by entities which follow the concept of conservatism in accounting.

Answer 12

d)

To determine

To state : Consistency between concept of conservatism and concept of physical capital maintenance.

Answer 13

d)

To determine

To state : Consistency between concept of conservatism and concept of physical capital maintenance.

Answer 14

e)

To determine

To state : Consistency between concept of conservatism and concept of financial capital maintenance

Answer 15

e)

To determine

To state : Consistency between concept of conservatism and concept of financial capital maintenance

Answer 16

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Answer 17

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Answer 18

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Answer 19

Ch. 5 - Prob. 5.1C Ch. 5 - Prob. 5.2C Ch. 5 - Prob. 5.3C Ch. 5 - Prob. 5.4C Ch. 5 - Prob. 5.5C Ch. 5 - Prob. 5.6C Ch. 5 - Prob. 5.7C Ch. 5 - Prob. 5.8C

Concept of conservatism.

Solution Summary: The author explains the concept of conservatism in accounting. It ensures that the financial information represented by financial statements is relevant to its users by removing impact of speculative gains.

Concept explainers

To define : Concept of conservatism.

To define : Effect of conservatism on financial reporting.

To state : Relevance and faithfulness of information provided by entities which follow the concept of conservatism in accounting.

To state : Consistency between concept of conservatism and concept of physical capital maintenance.

To state : Consistency between concept of conservatism and concept of financial capital maintenance

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Chapter 5 Solutions