Which of the Following Statements Is True Regarding the Conceptual

question 37

Multiple Choice

Which of the following statements is true regarding the conceptual frameworks developed by FASB and IASB?

• A) The economic entity assumption is not part of either framework
• B) The monetary unit assumption is part of each framework and the U.S. dollar is established as the common unit of currency.
• C) Both have similar measurement principles based on historical cost and fair value.
• D) The conceptual frameworks underlying U.S. GAAP and IFRS are dissimilar.

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Definitions:

Endowment Effect

The phenomenon where individuals value an owned object higher than they would if they did not own it.

Raffle Prize

A reward given to a randomly selected participant in a raffle, where people enter by purchasing tickets for a chance to win.

Myopia

Refers to the difficulty human beings have with conceptualizing the more distant future. Leads to decisions that overly favor present and near-term options at the expense of more distant future possibilities.

Behavioral Economists

Specialists who study the effects of psychological, cognitive, emotional, cultural, and social factors on the economic decisions of individuals and institutions.