Chapter 2 Flashcards
0
Q
What are the basic principles of accounting?
A
Measurement principle
Revenue recognition principle
Expense recognition principle
Full disclosure principle
1
Q
What are the economic assumptions?
A
- Economic entity
- Going concern
- Monetary unit
- Periodicity
2
Q
What is the major constraint?
A
Cost constraint: cost shouldn’t exceed the benefits derived from the information
3
Q
List the major qualitative characteristics
A
Fundamental qualities
Enhancing qualities
4
Q
What are the fundamental qualities?
A
Relevance
Faithful representation
5
Q
What determines relevance?
A
Predictive value
Confirmatory value
Materiality
6
Q
What determines faithful representation?
A
Completeness
Neutrality
Free from error
7
Q
What are the enhancing qualities?
A
Comparability
Verifiable
Timely
Understandable
