Your aunt recently received the annual report for a company inwhich she has invested. The report notes that the statements havebeen prepared in accordance with âgenerally accepted accountingprinciples.â She has also heard that certain terms have specialmeanings in accounting relative to everyday use. She would like youto explain the meaning of terms she has come across related toaccounting.
Instructions
Go to http://www.fasb.org and access the FASB ConceptsStatements and respond to the following items. (Provide paragraphcitations.) When you have accessed the documents, you can use thesearch tool in your Internet browser.
(a) How is âmaterialityâ defined in theconceptual framework?
(b) The concepts statements provide severalexamples in which specific quantitative materiality guidelines areprovided to firms. Identity at least two of these examples. Do youthink the materiality guidelines should be quantified? Why or whynot?
(c) The concepts statements discuss the conceptof âarticulationâ between financial statement elements. Brieflysummarize the meaning of this term and how it relates to anentityâs financial statements.
Your aunt recently received the annual report for a company inwhich she has invested. The report notes that the statements havebeen prepared in accordance with âgenerally accepted accountingprinciples.â She has also heard that certain terms have specialmeanings in accounting relative to everyday use. She would like youto explain the meaning of terms she has come across related toaccounting.
Instructions
Go to http://www.fasb.org and access the FASB ConceptsStatements and respond to the following items. (Provide paragraphcitations.) When you have accessed the documents, you can use thesearch tool in your Internet browser.
(a) How is âmaterialityâ defined in theconceptual framework?
(b) The concepts statements provide severalexamples in which specific quantitative materiality guidelines areprovided to firms. Identity at least two of these examples. Do youthink the materiality guidelines should be quantified? Why or whynot?
(c) The concepts statements discuss the conceptof âarticulationâ between financial statement elements. Brieflysummarize the meaning of this term and how it relates to anentityâs financial statements.
Related questions
our aunt recently received the annual report for a company inwhich she has invested. The report notes that the statements havebeen prepared in accordance with "Generally Accepted AccountingPrinciples." She has also heard that certain terms have specialmeanings in accounting relative to everyday use. She would like youto explain the meaning of terms she has come across related toaccounting.
How is "Materiality" defined in the conceptual framework?
| A. | The Conceptual Framework defines materiality as fivepercent. | |
| B. | Materiality is strictly a quantitative characteristic ofaccounting information | |
| C. | Materiality and relevance are both defined in terms of whatinfluences or makes a difference to a decision maker | |
| D. | None of these are correct |
