ACC325_WileyPlus_Ch2 - (Qualitative Characteristics) The...

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Unformatted text preview: (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 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. 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 Reliability (j) Issuance of interim reports is an example of what primary ingredient of relevance? Timeliness (Elements of Financial Statements) Ten interrelated elements that are most directly related to measuring the performance and financial status of an enterprise are provided below. Assets Distributions to owners Expenses Liabilities Comprehensive income Gains Equity Revenues Losses Investments by owners Identify the element or elements associated with the 12 items below. (a) Arises from peripheral or incidental transactions. Gains or losses (b) Obligation to transfer resources arising from a past transaction. Liabilities (c) Increases ownership interest. Investment by owners or Comprehensive income (d) Declares and pays cash dividends to owners. Distribution to owners (e) Increases in net assets in a period from nonowner sources. Comprehensive income (f) Items characterized by service potential or future economic benefit. Assets (g) Equals increase in assets less liabilities during the year, after adding distributions to owners and subtracting investments by owners. Comprehensive income (h) Arises from income statement activities that constitute the entity's ongoing major or central operations....
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This note was uploaded on 04/10/2011 for the course ACC 325 taught by Professor Sign during the Spring '11 term at S. Alabama.

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ACC325_WileyPlus_Ch2 - (Qualitative Characteristics) The...

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