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Related Flashcards
Cards In This Set
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What are the objectives of financial reporting?
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1. To provide information about economic resources, the claims to those resources, and the changes to them.
2. To provide information that is helpful to investors and creditors and other users in assessing the amounts, timing, and uncertainty of future cash flows.
3. To provide information that is useful to those making investment and credit decisions.
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The two primary qualities that make accounting information useful for decision making are
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Relevance and Reliabiity
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Financial information exhibits the characteristic of consistency when
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Accounting entities give accountable evetns the same accounting treatment from period to period.
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In classsifying the elements of finacial statements, the primary distinction between revenues and gains is
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The nature of the activities that gave rise to the transactions involved.
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What basic accounting assumptions is threatened by the existence of severe inflation in the economy?
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Monetary unit assumption.
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The allowance for doubtful accounts, which appears as a deduction from accounts receivable on a balance sheet and whis is based on an estimate of bad debts, is an application of the
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Matching principle
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Information that is measured and reported in a similar fashion across points in time is known when discussing financial accounting information as
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Consistency
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Preparaton of consolidated financial statements when a parent-subsidiary relationship exists is an expample of the
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Economic entity assumption
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A decrease in net assets arising from peripheral or incidental transactions is a called
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A Loss
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