DQ2-2Explain the difference between a fundamental qualitative characteristic and an enhancing qualitative characteristic.

DQ2-6Explain how the cost constraint is applied by companies when determining what financial information should be reported.

DQ2-8What are the advantages and disadvantages of using the accrual basis of accounting rather than the cash basis?

DQ2-19Explain why companies depreciate their buildings and equipment.

DQ2-26

Indicate whether each of the following statements is true or false:

a.The cash basis of accounting recognizes revenues when they are received.

b.In the cash basis of accounting, there is no such thing as a prepaid rent account.

c.In the accrual basis of accounting, paying an account payable creates an expense.

d.In the accrual basis of accounting, interest should be recognized only when it is paid.

e.Cash receipts from customers increase accounts receivable.

f.Expenses decrease shareholders' equity.

g.Dividends are an expense of doing business and should appear on the statement of income.

h.Interest paid on bank loans is reported in the operating activities section of the statement of cash flows.

DQ2-27Explain, in your own words, why the normal cash flow pattern is generally+ / / +(operating, investing, financing).