Bab 2 Flashcards
What are the two fun qualitative characteristics
1)relevance - finan info is regarded as relevant if its capable of influence of the decisions of users
2)faithful rep - known as reliability and also finan info must be neutral, complete and free from errors
What are the 2 parts of relevance, with explanations?
1)confirmatory value - provide info from the past and known as feedback value
2)predictive value - provide predictive power regarding possible future events
What are 3 parts of faithful rep?
1)free from errors- info must be free from any errors
2)neutral - info must be free from bias
3)complete - finan statement cannot exclude any transactions.
What are the 4 charateristics of enhancing qualitatives?
1)Comparability
2)Verifialibity
3)timeliness
4)understandability
What is comparability?
The degree which accounting standards and policies consistenly applied from one period from another. With consistenly applied throughout accounting period, enable to draw insightful conclusions towards trends and the performancd of the company over the time. The ability to easily compare the company financials statement with another companies.
What is verifiability?
The extent to which information is reproducible given the same data and assumptions
What is timeleness
How quicky info available to users of acccounting info. The less timely, the less useful info is for decisions making. It is matters for acc info bcs it is competes with other info
What is understandability
The degree to which info is easily understood. Info that is understandable to the average user of f.s is highly desirable
What is BAA basic acc assumptions ?
GC
HC
EE
MM
What is GC
A business is assumed will continue to operate in the foreseeable future using its assests to carry on its operation and will lasting forever to fulfill their objectives and commitments
What is HC
All transactions are recorded at their original cost and shown in the firm’s acc reports at their historical origin price.
What is EE
-Knowns as business entity concept
-Advocates for the separation of the buss trans and its owners tranc
-Assets of owners shouldnt mixed w buss as they cannot personally liable for debts of buss
Entity theory enable one to accurately determine f.p of buss by distinguish between personal from buss assests n liability
What is MM
-known as monetary concept
-the purchasing power of the unif of measure used in acc IS RM bcs
1)money is the common denominator
2) monetary unit provides an appropriate acc measurement and analysis
The purposes of CF?
Assist MASB to develop MFRS and assist all parties to understand interpret the standards
