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Inter ACCT 1 exam 1

chap 2

QuestionAnswer
conceptual framework establishes the concepts that underlie financial reporting.
objective of financial reporting provide financial information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors in making decisions about providing resources to the entity. first level
second level qualitative revelance
predictive value used by investors to form their own expectations about the future
confirmatory value Relevant information also helps users confirm or correct prior expectations
Materiality a company-specific aspect of relevance. Information is material if omitting it or misstating it could influence decisions that users make on the basis of the reported financial information. How relevant something is
faithful representation the numbers and descriptions match what really existed or happened.
Completeness all the information that is necessary for faithful representation is provided
Neutrality a company cannot select information to favor one set of interested parties over another
Verifiability when independent measurers, using the same methods, obtain similar results.
Timeliness having information available to decision-makers before it loses its capacity to influence decisions
economic entity assumption economic activity can be identified with a particular unit of accountability. a company keeps its activity separate and distinct from its owners and any other business unit.13
going concern assumption that the company will have a long life
monetary unit assumption money is the common denominator of economic activity and provides an appropriate basis for accounting measurement and analysis
e periodicity (or time period) assumption a company can divide its economic activities into artificial time periods
Fair valu the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Product costs s material, labor, and overhead, attach to the product.
period costs officers’ salaries and other administrative expenses, attach to the period
e full disclosure principle
notes main body of statements
supplementary info include details or amounts that present a different perspective from that adopted in the financial statements
cost constraint companies must weigh the costs of providing the information against the benefits that can be derived from using it.
comparebilty quality of info should be the same for TWO SEPERATE STATEMENST
TIMELESSNESS info ahould be important BEFORE it loses importance
predictive value should be able to EXPECT financial outcomes
relevance info should MAKE A DIFFERENCE
neutrality NO BIAS
FAITHFUL REP info quality should REPRESENT economic phenomona
fre from error the extent of ACCURATE INFO
COMPLETENESS INCLUDES ALL THE INFO
Created by: Virajasaur
 

 



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