Accounting chap 2 vocab

Accounting chap 2 vocab - Chap 2 Understandability the...

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Unformatted text preview: Chap 2 Understandability the quality of accounting information that makes it comprehensible to those willing to spend the necessary time. Relevance the capacity of information to make a difference in a decision Reliability the quality that makes accounting information dependable in representing the events that it purports to represent. Comparability for accounting information, the quality that allows a user to analyze two or more companies and look for similarities and differences. Depreciation the process of allocating the cost of a long-term tangible asset over its useful life. Consistency for accounting information, the quality that allows a user to compare two or more accounting periods for a single company. Materiality the magnitude of an accounting information omission or misstatement that will affect the judgement of someone relying on the information. Conservatism the practice of using the least optimistic estimate when two estimates of amounts are...
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