JICES Exercise 2-1 The conceptual framework has been created to make accounting information useful Indicate whether the following statements about the conceptual framework are true or false (a) Accounting standards that rely on a body of concepts will result in useful and consistent pronouncements () General purpose financial reports are most useful to company insiders in making strategic business decisions. (c) Accounting standards based on individual conceptual frameworks wil generally result in consistent and comparable accounting reports. (d) Capital providers are the only users who benefit from general purpose financial reporting (e) Accounting reports should be developed so that users without knowledge of economics and business can become informed about the financial results of a company Exercise 2-2 The conceptual framework identifies the fundamental and enhancing qualitative characteristics that make accounting information useful Answer the following questions related to these qualitative characteristics (a) Which quality of financial information makes it possible for users to confirm or correct prior expectations? (b) the U.S. Securities and Exchange Commission chairman once noted that it becomes accepted or expected that accounting prinoples are determined or modified in order to achieve goals that do not nvolve economic measurement, we risk a serious lors in confidence in the credibility of our financial information system, which qualitative characteristic of accounting information should ensure that this stution will not cour? (c) Miner Corp. chooses to account for a transaction based simply on its legal form. Is this acceptable? (d) Companies in the mining industry defer losses on the properties because recognizing such losses immediately could have adverse economic consequences for the industry. Which oualitative charactent of accounting information is not followed? (e) Only Once Ltd, provides overly complicated descriptions and explanations in its statement notes and provides only agregated toals on the face of its financial statements. Which qualitative characteristic of accounting information is not followed? (1) Baskins does not issue its first quarter report until after the second quarter's results are reported. Which qualitative characteristic of accounting information is not followed (o) Predictive value is an ingredient of which qualitative characteristic of useful information Vittorio Inc. is the only company in industry to deprecatets plant assets on a straightene baseWhich qualitative characteristic is not present? (1) Green Gable Corp. has tried to determine the replacement cost of its inventory. Three different appraisers are substantially different amounts for this value. The president then decides to use the middle value for external reports. Which qualitative characteristic of information is lacking in these data? (i) The controller at Owens Inc. noticed that a material transaction was not included in the year and financial results. Which qualitative characteristic is not present