Chapters 1 and 2-The Objective of Financial Reporting and Conceptual Framework Homework Problems MGMT 35000 Spring 2022 Chapter 1 5. Briefly explain the meaning of decision-usefulness in the context of financial reporting. 7. What is the likely limitation of "general-purpose finan- cial statements"? CA1-4 (Financial Accounting) Omar Monena has recently completed his first year of studying accounting. Ha instructor for next semester has indicated that the primary focus will be the area of financial accounting Instructions (a) Differentiate between financial accounting and managerial accounting (b) One part of financial accounting involves the preparation of financial statements. What are the financial statements most frequently provided? fo What is the difference between financial statements and financial porting? CA1-12 GROUPWORK GAAP Terminology Wayne Rogers, an administrator at a major university, recently said. "I've got some CDs in my IRA, which I set up to beat the IRS. As elsewhere, in the world of a fluent in abbreviations and acronyms Instructions and finance, it om helps to be Presented below is a list of common accounting acronyms. Identify the term for which ach acronym stands and provide a bi definition of each term. (a) AICPA (b) CAP to EITF (d) APB (e) FAF 10 FASAC GAAP 00 (0) FASH SEC GLASB Chapter 2 4. Briefly describe the two fundamental qualities of useful accounting information. 12. What are the four basic assumptions that underlie the financial accounting structure? BE2-5 (L03) Presented below are three different transactions related to materiality. Explain whether you would classify these transactions as material. (a) Blair Co. has reported a positive trend in earnings over the last 3 years. In the current year, it reduces its bad debt allow ance to ensure another positive eamings year. The impact of this adjustment is equal to 3% of net income (b) Hindi Co. has an unusual gain of $3.1 million on the sale of plant assets and a $3.3 million loss on the sale of invest ments. It decides to net the gain and loss because the net effect is considered immaterial. Hindi Co's income for the current year was $10 million. (c) Damon Co. expenses all capital equipment under $25,000 on the basis that it is immaterial. The company has followed this practice for a number of years E2-6 (L05,0) (Assumptions, Principles, and Constraint) Presented below are the assumptions, principles, and constraint used in this chapter 1. Economic entity sumption 2. Going concern assumption 3. Monetary unit assumption 4. Periodicity assumption 5. Measurement principle (historical cost) Instructions 6. Measurement principle (fair value) 7. Expense recognition principle 8. Full disclosure principle Cost constraint 10. Revenue recognition principle Identify by number the accounting assumption, principle, or constraint that describes each situation below Do not use a number more than once G) Allocates expenses to revenues in the proper period (b) Indicates that fair value changes subsequent to purchase are not recorded in the accounts (De not use venue cogni tion principle) io Ensures that all relevant financial information is reported (d) Rationale why plant assets are not reported at liquidation value. Do not see historical cost principle) (e) Indicates that personal and business woord keeping should be separately maintained (0) Separates financial information into time periods for reporting purpos (g) Assumes that the dollar in the "messuring stick west to port on financial performance