Ch 2

Question 1

Assets

Answer 1

Future Economic Benefit by entity from past

Question 2

Comparability

Answer 2

Compare diff companies bc measure & report similarly

Question 3

Comprehensive Income

Answer 3

Change in Equity of entity from non owner sources

Question 4

Conceptual Framework

Answer 4

System of interrelated objectives & fundamentals lead to consistent standards

Question 5

Confirmatory Value

Answer 5

Info that confirms/corrects prior expectations

Question 6

Completeness

Answer 6

All info neccessary is presented for Faithful Rep

Question 7

Consistency

Answer 7

Same acct. treatment to similar event period to period

Question 8

Cost Constraint

Answer 8

Constraint that says- Info should be provided only if benefit of providing overweighs cost of providing

Question 9

Economic Entity Assumption

Answer 9

Economic activity can be identified with a particular unit of accountability

Question 10

Expense Recognition Principle

Answer 10

Expense follow revenue

Question 11

Equity

Answer 11

Residual Interest in asset of entity after deducting liabilities

Question 12

Expenses

Answer 12

Outflow/Using up of Asset/ Incur Liablity

From Delivering or Producing Goods, perform services, or other that con sue entities ongoing central operations

Question 13

Fair Value Principle

Answer 13

Amt at which asset can be exchanged, liability settled/ equity instrument granted could be exchanged between willing parties in arms length transaction

Question 14

Faithful Representation

Answer 14

Numbers & Description actually represent what happened

Question 15

Feedback Value

Answer 15

Info that corrects or confirms prior expectations

Question 16

Full Disclosure Principal

Answer 16

Info should be provided if of sufficient importance to influence informed user

Question 17

Gains

Answer 17

Increase in equity( net assets)
from peripheral or incidental transactions of entity
Except if from Revenue or Investment by Owner

Question 18

Going Concern Assumption

Answer 18

Enterprise will continue in operation long enough to carry out existing objectives & commitments

Question 19

Historical Cost Principle

Answer 19

Asset & Liability recorded at acquisition price

Question 20

Liabilities

Answer 20

Future Sacrifice of economic benefit
From present obligations of an entity to transfer assets or provide service to other entity in future
Result of past transactions

Question 21

Losses

Answer 21

Decrease in Equity (Net Assets)
From peripheral or incendntal trans of entity
Not from Expenses or Distribution to Owner

Question 22

Materiality

Answer 22

Constraint- if item is important enough to influence decision of investor or creator

Question 23

Measurement Principles

Answer 23

Mixed Attribute

Permits use of various measurement bases

Question 24

Monetary Unit Assumption

Answer 24

Money is Common Denominator

Question 25

Neutrality

Answer 25

Info unbiased and cannot favor one set of party over another

Question 26

Periodicity Assumption

Answer 26

economic activities can be divided into time periods

Question 27

Predictive Value

Answer 27

Info that helps users make predictions abt outcome of past,present & future events

Question 28

Qualitative Characteristics

Answer 28

Make acct. info useful

Question 29

Relevance

Answer 29

Info capable of making difference in decision

Question 30

Reliability

Answer 30

Info Verifiable
Faithfully Represented
Free of Error & Bias

Question 31

Revenue Recognition Principle

Answer 31

Revenue recognized when obligation performed

Question 32

Revenues

Answer 32

Inflow/Enhancement of Asset/Settlement Of Liablities

During Delivering, Producing, or activity that is major operations

Question 33

Understandability

Answer 33

Informed users understand significance of info

Question 34

Verifiability

Answer 34

Ability to have info confirmed by independent persons