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Concepts L3
Accounting Concepts NCEA L3
Question | Answer |
---|---|
Accrual Basis | Reported in the financial statements to which they relate. |
Going Concern | Entity will continue to operate into the foreseeable future |
Comparability | Identify similarities and differences between financial statements |
Understandability | Readily understandable to users. |
Relevance | Influences the decisions of users. Confirm past predictions (about past event). Assisting in future predictions |
Materiality | Material by dollar amount or disclosure of transaction will influence decision making |
Reliability | Free from material error or bias. Represented faithfully. |
Faithful Representation | Represented faithfully. Report all assets, liabilities, income and expenses that meet the criteria. |
Substance over form | Accounted for in accordance with the substance of economic reality of transaction rather that the legality of the transaction |
Neutrality | Free from bias |
Prudence | Exercise care with estimates |
Completeness | Information needs to be complete. |
Historical Cost | Assets: Cash paid at time of acquisition Liability: Proceeds received in exchange for the obligation |
Current Cost | Assets: Cash that would be paid if asset was acquired currently Liability: cash required to settle obligation currently |
Realisable Value | Assets: Cash that would be obtained if asset was sold in an orderly disposal Liability: Settlement values. |
Balance between qualitative characteristics | Which has the most relative importance |
Balance between benefit and cost | benefits gained from information should not exceed the cost of providing it |
Timeless | Balance timely reporting and provision of reliable information |