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Inter ACCT 1 exam 1
chap 2
| Question | Answer |
|---|---|
| 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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