A Well-Designed AIS Can Respond to Many Parts of the FASB

question 49

Essay

A well-designed AIS can respond to many parts of the FASB Conceptual Framework. Descriptions of the assumptions, principles and constraints of the framework are listed below in alphabetic order. Group them as they are found in the conceptual framework, indicating the relevant term from the conceptual framework.
A. A company will continue in business long enough to satisfy its current obligations.
B. A company's accounting records should be kept separate from those of its owner.
C. Absent other information, assets are recorded and reported at their purchase price.
D. Companies in the same industry should follow similar accounting practices.
E. Financial statements should include complete information for making decisions.
F. For financial reporting purposes, we divide the life of a business into quarters, years or some other measurement of time.
G. Revenue should be recorded in the AIS when goods and services are exchanged.
H. The benefits of obtaining information should outweigh the cost of obtaining it.
I. The costs of earning revenue should be put on the same income statement with the revenue they generate.j. The value of a dollar is constant over time.k. When a dollar amount is too small to make a significant difference in decision making, other accounting rules may be ignored.l. When faced with a choice of methods, make the choice that puts the business in the worst possible financial light.

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Definitions:

Parol Evidence

The rule in contract law that prohibits the introduction of evidence of prior or contemporaneous oral agreements to alter, contradict, or add to the terms of a written contract.

Typographical Error

A typographical error is a mistake made in the typing process of written or printed material, often referred to as a typo.

Requirements

Conditions or capacities needed by individuals or systems to achieve specific goals or functions.

Oral Agreement

A contract or agreement where the terms have been spoken but not written down, yet is legally binding.