ch 1

Question 1

Relevance

Answer 1

Information that is capable of making a difference in a decision is said to have this fundamental quality

Question 2

Neutrality

Answer 2

Requires that information cannot be selected to favor one set of interested parties over another

Question 3

Predictive Value

Answer 3

Information that provides a basis for forecasting annual earnings for future periods

Question 4

free from error

Question 5

Confirmatory Value

Question 6

Comparability

Answer 6

Information is measured and reported in a similar manner for different enterprises

Question 7

Materiality

Answer 7

Items whose amounts are small relative other amounts may be accounted for in an expedient manner which is not considered GAAP.

Question 8

Verifiability

Answer 8

Requires a high degree of consensus among individuals on a given measurement

Question 9

Faithful Representation

Answer 9

Information that is complete and reasonably free from error is said to have this fundamental quality

Question 10

Timeliness

Answer 10

Information must be available to decision makers before it loses its capacity to influence decisions

Question 11

Completeness

Answer 11

A company cannot suppress information just because it is embarrassing or damaging to the entity.

Question 12

Understandability

Question 13

Two fundamental qualities that make accounting information useful for decision-making purposes.

Answer 13

Relevance and faithful representation

Question 14

Four enhancing qualities that are related to both relevance and faithful representation.

Answer 14

Comparability
Verifiability
Timeliness
Understandability