The Conceptual Framework States That an Important Implication of the Qualitative

question 35

Multiple Choice

The Conceptual Framework states that an important implication of the qualitative characteristic of comparability is that:

• A) it will allow different users of the information to come to a consensus.
• B) it will be used to predict outcomes of past, present or future events.
• C) users will be informed of the accounting policies used in the preparation of the financial reports, plus any changes to those policies and the effects of those changes.
• D) if there is a choice of accounting methods one method should be chosen and then applied throughout the life of the entity.

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Definitions:

Strike Price

This is the fixed price at which the owner of an option can purchase (in the case of a call option) or sell (in the case of a put option) the underlying security or commodity.

Standard Deviation

A statistical measurement of the dispersion or variation in a set of values, indicating how much individual data points differ from the mean.

Call Option

A financial contract that gives the buyer the right, but not the obligation, to buy an asset at a specified price within a certain time period.

Strike Price

The specified price at which the buyer of an option can buy (for a call option) or sell (for a put option) the underlying security or commodity.