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q objectives of financial reportingfinancial reporting objectives are the broad overriding objectives sought by accountants engaging in financial
q financial accounting standards boards conceptual frameworkexperts have discussed the exact nature of the basic concepts and related principles
q misstatement of accounting informationthe fasb describes materiality as the magnitude of an omission or misstatement of accounting information that
q modifying conventions on materialitythe materiality is a modifying convention that permits accountants to deal with immaterial unimportant items in
q what is cost-benefitcost-benefit the cost-benefit consideration engrosses deciding whether the benefits of including optional information in
q explain about modifying conventionsin certain examples companies dont strictly apply accounting principles because of modifying conventions or
q explain about full disclosure principlethe full disclosure principle states that information significant enough to influence the decisions of an
q gain and loss recognition principlethe gain and loss recognition principle states that we record gains merely when realized but losses when they
q explain about period costsperiod costs are costs not noticeable to specific products and expensed in the period incurred administrative and selling
q define the product costsproduct costs are costs earns in the acquisition or manufacture of goods since you will see in the next section included as
q show timing of expense recognitionthe timing of expense recognition the matching principle entail that a relationship exists between expenses and
the measurement of expense accountants measure largely assets used in operating a business by their historical costs consequently they measure a
q what is matching principleexpense recognition is closely related to as well as sometimes discussed as part of the revenue recognition principle the
q cash collection as point of revenue recognitionseveral small companies record revenues and expenses at the time of cash collection and payment
q describe exceptions to the realization principleexceptions to the realization principle the following illustrations are instances when practical
image is everything inc iie is located in an emerging market it specializes in lithographic duplication catering to demands from the nouveau riche
q high-fiber diet for diverticular diseasefor mild symptoms a clear liquid diet is recommended more serious cases may require hospitalization
q explain about realization principlerealization of revenue under the realization principle the accountant doesnt recognize record revenue until the
q explain about revenue recognition principleunder the revenue recognition principle revenues must be earned and realized before they are recognized
q financial statements in european countriesin a few european countries the financial statements contain secret reserves these secret reserves occur
q share-based payment transactionsthe fair value accounting standard sfas 157 applies to monetary assets of all publicly-traded companies in the us
q explain about cost principleas applied to largely assets this principle is often called the cost principle it utter that purchased or
q explain about exchange-price or cost principlewhen resources are transferred between two parties such like buying merchandise on account the
q general principles of accountingorganizations that have contributed towards the development of the principles are the 1american institute of
q general accepted accounting principlesin general accepted accounting principles gaap set forth standards or methods for presenting financial