|
AccountingTermsDictionary |
| U.S. GAAP Codification | Accounting Topics |
|
Accounting Terms Dictionary |
| Principles of Accounting, U.S. GAAP Financial Reporting Guide |
| Accounting by Topic, Accounting Terms Dictionary |
| 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) |
| Index of Accounting Terms Dictionary |
| Copyright © AccountingInfo.comTM Legal Disclaimer |