Financial Reporting and Concepts

Question 1

An enhancing quality of accounting such that even though different companies may use different accounting methods, there is still sufficient basis for valid comparison

Answer 1

comparability

Question 2

An enhancing quality of accounting such that deviations in outcomes from period to period should be the result of deviations in underlying performance (not accounting quirks)

Answer 2

consistency

Question 3

Accounting information should be presented for circumscribed distinct economic units

Answer 3

entity assumption

Question 4

A fundamental quality of accounting such that information must be truthful; complete, neutral, and free from error

Answer 4

faithful representation

Question 5

encompass the rules, practices, and procedures that define the proper execution of accounting

Answer 5

Generally accepted accounting principles – (GAAP)

Question 6

In the absence of evidence to the contrary, accountants assume that a business will continue to operate well into the future

Answer 6

going concern

Question 7

Accounting measures transactions and events in units of money, in contrast to some other unit of measure (e.g., acres of land)

Answer 7

monetary assumption

Question 8

A fundamental quality of accounting such that information should be timely and bear on the decision-making process by possessing predictive or confirmatory (feedback) value

Answer 8

relevancy

Question 9

regulatory body with which public companies must file and report

Answer 9

“SEC” – Securities and Exchange Commision

Question 10

An enhancing quality of accounting such that information is clear and concise to those with reasonable business knowledge

Answer 10

understandability