AccountingTermsDictionary.comTM

U.S. GAAP Codification IFRS International Standards Accounting Standards, ASC

Accounting Terms Dictionary
Definitions and Examples


U.S. GAAP Codification IFRS IFRS News and Updates IFRS for SMEs
Principles of Accounting Intermediate Accounting,  Accounting Textbooks
Securities Law Library U.S. Tax Code IFRS U.S. GAAP Comparison


Accounting Terms Dictionary

Qualitative characteristics of accounting information

Review questions about
the qualities of accounting information

Based on the Statement of Financial Accounting Concepts (SFAC) No. 2
--> "Qualitative characteristics of accounting information"
--> issued by FASB in May 1980


1. What is the most important quality of accounting information?
--> Decision usefulness
--> The objective of accounting is to provide useful information to the users

2. What the two primary decision-specific qualities to make information useful for decisions?
--> Relevance and Reliability
--> To make information useful, information should be relevant to the decision and reliable.

3. What are the ingredients of relevance?
--> timeliness, predictive value, feedback value

4. What are the ingredients of reliability?
--> verifiability, representational faithfulness

5. What are the secondary qualities applicable for both relevance and reliability?
--> comparability

6. What is the secondary quality for reliability?
--> neutrality

7. Qualities of accounting information:

100. Decision usefulness
110. Relevance
111. timeliness
112. predictive value
113. feedback value
114. comparability

120. Reliability
121. verifiability
122. representational faithfulness
123. neutrality
124. comparability

8. To make information useful for decisions, information should be:
(A) relevant
(B) reliable

9. To make information relevant, information should have the following qualities:
(C) timeliness
(D) predictive value
(E) feedback value
(F) comparability

10. To make information reliable, information should have the following qualities:
(G) verifiability
(H) representational faithfulness
(I) neutrality
(J) comparability

11. In providing information, what is a pervasive constraint?
--> the benefits of information should be greater than the costs of information

12. What is the user-specific quality of information to be useful?
--> understandability
--> information should be understandable to be useful

13. What is the threshold for recognizing the elements of accounting information?
--> materiality
--> material items are recognized
--> items that are not material do not require recognition

14. What is materiality?
--> Information (AA) is material,
--> if the omission or misstatement of (AA)
--> probably changes or influences
--> the judgment of a reasonable person who relies on (AA)


[IFRS perspectives]

15. Qualities of accounting information are addressed by SFAC No. 2 in the United States.
Which document covers the qualitative characteristics of financial statements under IFRS?
--> "Framework for the preparation and presentation of financial statements"
--> issued by IASC in July 1989
--> adopted by IASB in April 2001

IFRS: International Financial Reporting Standard
IASC: International Accounting Standards Committee
IASB: International Accounting Standards Board

IASC was founded in 1973
IASC issued 41 International Accounting Standards (IASs)

In 2001, IASB succeeded IASC
IASB issues IFRSs and revises IASs






Index of Accounting Terms Dictionary


U.S. GAAP by Codification Topic 
 
 105  GAAP Hierarchy 
 105  GAAP History 

 205  Presentation of Financial Statements 
 205-20 Discontinued Operations 
 210  Balance Sheet 
 210-20 Offsetting 
 220  Comprehensive Income 
 225  Income Statement 
 225-20 Extraordinary and Unusual Items 
 230  Statement of Cash Flows 
 250  Accounting Changes and Error Corrections 
 260  Earnings per Share 
 270  Interim Reporting
 
 310  Impairment of a Loan
 320  Investment Securities 
 320  Other-Than-Temporary Impairments, FSP FAS 115-2 
 320-10-05 Overview of Investments in Other Entities 
 320-10-35 Reclassification of Investments in Securities
 323-10 Equity Method Investments
 323-30 Investments in Partnerships and Joint Ventures 
 325-20 Cost Method Investments 
 330  Inventory

 340-20 Capitalized Advertising Costs 
 350-20 Goodwill 
 350-30 Intangibles Other than Goodwill 
 350-40 Internal-Use Software 
 350-50 Website Development Costs 
 360  Property, Plant and Equipment
 360-20 Real Estate Sales 
 
 410  Asset Retirement and Environmental Obligations 
 420  Exit or Disposal Cost Obligations 
 450  Contingencies 
 450-20 Loss Contingencies 
 450-30 Gain Contingencies
 480  Redeemable Financial Instruments 

 505-20 Stock Dividends, Stock Splits 
 505-30 Treasury Stock




 605  SEC Staff Accounting Bulletin, Topic 13 
 605-25 Revenue Recognition - Multiple Element Arrangements 
 
 715-30 Defined Benefit Plans - Pension
 718  Share-Based Payment 
 730  Research and Development 
 730-20 Research and Development Arrangements 

 805  Business Combinations  
 810  Consolidation 
 810  Noncontrolling Interests 
 810  Consolidation of Variable Interest Entities, SFAS 167 
 
 815  Derivatives and Hedging Overview 

 820  Fair Value Measurements  
 820  Fair value when the markets are not active, FSP FAS 157-4
 825  Fair Value Option 

 830  Foreign Currency Matters 
 830-20 Foreign Currency Transactions 
 830-30 Translation of Financial Statements 
 835  Interest 
 835-20 Capitalization of Interest 
 835-30 Imputation of Interest 

 840  Leases 
 840-20 Operating Leases 
 840-30 Capital Leases 
 840-40 Sale-Leaseback Transactions
 845  Nonmonetary Transactions 

 855  Subsequent Events 
 860-20 Sale of Financial Assets, SFAS 166 
 860-50 Servicing Assets and Liabilities, SFAS 156 

 985-20 Costs of software to be sold  





   IFRS 1 - IFRS 9
IFRS Overview
IFRS 1: First-time adoption of International Financial Reporting Standards
IFRS 2: Share-based payment
IFRS 3: Business combinations
IFRS 4: Insurance contracts
IFRS 5: Non-current assets held for sale and discontinued operations
IFRS 6: Exploration for and evaluation of mineral resources
IFRS 7: Financial instruments: disclosures
IFRS 8: Operating segments
IFRS 9: Financial Instruments





Copyright © AccountingTermsDictionary.comTM  All Rights Reserved.