Deck 1

Question 1

Ingredients of faithful representation include:

Answer 1

Completeness, neutrality, and freedom from error

Question 2

Ingredients of relevance:

Answer 2

Predictive value, confirming value, and materiality

Question 3

Two fundamental qualitative characteristics of financial reporting?

Answer 3

Relevance and faithful representation

Question 4

Enhancing qualitative characteristics include:

Answer 4

Comparability, verifiability, timeliness, understandability

Question 5

Conservatism principal

Answer 5

Recognize revenues/gains when the earnings process is complete; recognize expense/losses immediately

Question 6

What happens when there is a “Change in entity”?

Answer 6

Financial statements of all prior periods presented should be restated

Question 7

Revised depreciation =

Answer 7

Original cost - accumulated depreciation - any salvage value

Question 8

A change from direct recognition to the installment method is considered what kind of change?

Answer 8

change in accounting principle inseparable from a change in accounting estimate