Makes a difference in a business decision by providing predictive and confirmatory values.
What is relevance?
100
Expensing the purchase of a waste paper basket with an estimated useful life of 10 years is an application of ________.
What is materiality?
100
Transactions that change a company's financial statements are recorded in periods in which events occur.
What is the accrual basis of accounting?
100
If land that was purchased for ($30,000) increases in value to ($40,000), it continues to be reported at ($30,000).
What is the cost principle?
200
The relationship between current assets and current liabilities is important in evaluating a company's __________.
What is liquidity?
200
Jackson Cement Corporation reported ($35 million) for sales when it only had ($20 million) of actual sales. Which of the following characteristics of useful information has Jackson most likely violated?
What is reliable (faithful representation)?
200
The writing down of inventory to market follows the constraint of ______________.
What is conservatism?
200
Events expressed in money are only included in the accounting records.
What is the monetary unit assumption?
200
Applied in situations where assets are actively traded, such as investment securities.
What is the fair value principle?
300
Measures short-term ability of a company to pay its maturing obligations and to meet unexpected needs for cash.
What is liquidity?
300
Connor Corporation hired a new accountant. Over than next four years, the accountant used four different accounting methods to depreciate Connor's equipment. Which of the following characteristics of useful information has Connor most likely violated?
What is consistency?
300
Adherence to the procedure of choosing the accounting method that will least likely overstate assets and income is an example of the constraint of _________.
What is conservatism?
300
The life of a business can be divided into artificial time periods and useful reports covering those periods can be prepared.
What is the periodicity (time-period) assumption?
300
Requires companies to disclose all circumstances and events that would make a difference to financial statement users.
What is the full disclosure principle?
400
Free cash flow represents _______.
What is solvency?
400
Information accurately depicts what really happened by being complete and neutral.
What is faithful representation (reliable)?
400
Weighing the cost that companies will incur to provide the information against the benefit that financial statement users will gain from having the information available.
What is cost constraint?
400
To assess a company's performance and financial position accurately, it is important that business and personal transactions are separated.
What is the economic entity assumption?
400
In choosing between whether to use the cost or fair market value, what two fundamental qualities are used to make accounting information useful for decision-making.
What are relevance and faithful representative?
500
Debt to total assets ratio measures __________.
What is solvency?
500
Relevance and faithful representation are fundamental qualities whereas comparability, consistency, verifiability, timeliness, and understandability are ___________.
What are enhancing qualities?
500
The judgement concerning whether an item is large enough to matter to decision makers.
What is a materiality constraint?
500
Assumes that an enterprise will continue in operation long enough to carry out its existing objectives and commitments.
What is the going-concern assumption?
500
Dictates that companies record assets at their cost at time of purchase and over the time period held.