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AMA201_Exercise_2_2 - CONSISTENCY d Ignores the economic...

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Jesica Islas Intermediate Accounting 1 January 22, 2007 Professor A. Wu Chapter 2 Exercises on Chapter 2 Exercise 2-2 (Qualitative Characteristics) The qualitative characteristics that make accounting information useful for decision-making purposes are as follows. Relevance Timeliness Representational faithfulness Reliability Verifiability Comparability Predictive value Neutrality Consistency Feedback value Instructions Identify the appropriate qualitative characteristic(s) to be used given the information provided below. a. Qualitative characteristic being employed when companies in the same industry are using the same accounting principles. COMPARABILITY b. Quality of information that confirms users’ earlier expectations. FEEDBACK VALUE c. Imperative for providing comparisons of a company from period to period.
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Unformatted text preview: CONSISTENCY d. Ignores the economic consequences of a standard or rule. NEUTRALITY e. Requires a high degree of consensus among individuals on a given measurement. VERIFIABILITY f. Predictive value is an ingredient of this primary quality of information. RELEVANCE g. Two qualitative characteristics that are related to both relevance and reliability. COMPARABILITY AND CONSISTENCY h. Neutrality is an ingredient of this primary quality of accounting information. RELIABILITY i. Two primary qualities that make accounting information useful for decision-making purposes RELEVANCE AND RELIABLITY j. Issuance of interim reports is an example of what primary ingredient of relevance? TIMELINESS...
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