Question

State which of these selected enhancing qualitative characteristics and accounting conventions—comparability, verifiability, timeliness, cost constraint, consistency, full disclosure, materiality, or conservatism—is being followed in each case that follows.
1. Management provides detailed information about the company’s long-term debt in the notes to the financial statements.
2. A company does not account separately for discounts received for prompt payment of accounts payable because few of these transactions occur and the total amount of the discounts is small.
3. Management eliminates a weekly report on property, plant, and equipment acquisitions and disposals because no one finds it useful.
4. A company follows the policy of recognizing a loss on inventory when the market value of an item falls below its cost but does nothing if the market value rises.
5. When several accounting methods are acceptable, management chooses a single method and follows that method from year to year.
6. The internal audit department comes up with similar estimates to management’s determination of fair value of investments.
7. The company makes every effort to complete its financial statements within one week after the end of the accounting period.



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  • CreatedMarch 26, 2014
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