GAAP Flashcards
When information is provided before it loses its ability to influence decisions, it has this characteristic.
Timeliness
When several accountants can agree on the measurement of an activity, the information possesses this characteristic.
Verifiability
If users can comprehend the meaning of the information, the information is said to have this characteristic.
Understandability
If information confirms prior expectations, it possesses this characteristic.
Relevance
If information helps to predict future events, it possesses this characteristic.
Relevance
Freedom from bias is a component of this characteristic.
Faithful Representation
When several companies in the same industry use the same accounting methods, this qualitative characteristic exists.
Comparability
Information that accurately portrays an economic event satisfies this characteristic.
Faithful Representation
Requires that an activity be recorded at the exchange price at the time the activity occurred.
Historical cost
Allows a company to report financial activities separate from the activities of the owners.
Economic Entity
Implies that items such as customer satisfaction cannot be reported in the financial statements.
Monetary Unit
Specifies that revenue should only be recognized when a company has satisfied its performance obligation to a customer.
Revenue Recognition
Justifies why some assets and liabilities are not reported at their value if sold.
Going-Concern
Allows the life of a company to be divided into artificial time periods so accounting reports can be provided on a timely basis.
Time-Period
Is a prudent reaction to uncertainty.
Conservatism
