ACCT 5110 (graded A+ and with available accurate solutions

An accrued expense is an expense - ANSincurred but not paid Recognition - ANSthe process of formally recording and reporting an item in the financial statements of a company To be relevant an earnings report is expected to have - ANSpredictive and confirmatory value Conservatism - ANSaccruing net losses on obsolete inventory A constraint on useful information - ANSbenefits costs An example of conservatism - ANSlower of cost or market The idea that information should represent what it purports to represent - ANSRepresentational Faithfulness The availability of information when it is needed - ANSTimeliness A term that implies consensus - ANSVerifiability The threshold of recognition - ANSMateriality Depreciation on plant assets is computed each year by straight-line method - ANSConsistency Land is valued at cost - ANSHistorical cost Company X has used the FIFO inventory method for the past 20 years. However, all other major competitors use the LIFO method. Company X is contemplating a switch from FIFO to LIFO - ANSComparability A note describing the company's possible liability in a lawsuit is included with the financial statements even though no formal liability exists at the balance sheet date. - ANSFull Disclosure Goodwill is recorded in the accounts only when it arises from the purchase of another entity at a price higher than the fair market value of the purchased entity's identifiable net assets - ANSVerifiability