The answer is D:both A and B
Answer:
A) A relatively large budget deficit as a percentage of GDP beyond the European Union's deficit and debt rules.
Explanation:
A budget deficit is when the governments have more expenditures in a budgeted year than they have the revenues in form of taxes and other incomes. A deficit is excessive if it is large in comparison to the GDP.
In the European Union the budget deficit is considered excessive if it exceeds 3% of the running years GDP.
A public debt percentage to GDP of 60% or above is considered excessive as most of the GDP then is used for debt servicing and thus impacts negatively on the financial health of the country.
Hope that helps.
Answer: False
Explanation:
Classification shifting is a method used whereby the core earnings are manipulated by misclassifying the items in the income statement.
One way that managers make use of classification shifting is by reporting the operating expenses for the business as nonoperating expenses. This is usually done in order to inflate the operating income.
The statement in the question is false as classification shifting by managers doesn't lead to under-reporting of total expenses and over-statement of bottom-line net income rather it lead to over reporting.
Answer:
True or False Statements about the conceptual framework:
(a) False: The fundamental qualitative characteristics that make accounting information useful are relevance and faithful representation, which suggest materiality and completeness respectively.
(b) False: Relevant information must also be material in a financial statement user's decision, in addition to having predictive and confirmatory values.
(c) False: It is information that is relevant that is characterized as having predictive or confirmatory value, and not information that shows faithful representation.
(d) False: Comparability also refers to comparisons of a firm over time (which is appropriately described as consistency). This is in addition to the similar reporting of information by different companies.
(e) False: Enhancing characteristics do not relate only to faithful representation but also to relevance.
(f) True.
Explanation:
Faithful representation implies completeness. Relevance means that the disclosure will attract important consideration and is material to the matter. Therefore, users of financial reports base their decisions on relevant information and not irrelevant details.
