Chapter 1
Recognition and Measurement
5
AS-12 (
2
)
The management of Max Co. has decided to measure inventory using FIFO because this
method truly represents Max Co.’s movement of inventory in practice, is the most commonly
used method in the industry and provides the most reliable information to the end users.
Which fundamental qualitative characteristics does this choice help satisfy?
AS-13 (
2
)
Financial statements are typically released on an annual basis, with quarterly statements also
released by the public corporations. Which principle does periodic reporting satisfy?
AS-14 (
2
)
Why is timeliness an important enhancing qualitative characteristic of financial information?
AS-15 (
2
)
Clue Inc. has reported $150,000 in revenue in the fiscal year of 2016. A large cash sale
worth $80,000 is missing an invoice and related paperwork. Which enhancing qualitative
characteristic cannot be met by Clue?
