Intermediate Accounting Exam #1
providers of financial information - Answer- profit oriented companies, not for profit
entities, households
external users of financial information - Answer- investors, creditors, employees,
banks, labor unions, customers, suppliers, gov regulatory agencies
conceptual framework - Answer- underlying structure for the development of
accounting standards
GAAP - Answer- generally accepted accounting principles- body of accounting
standards
FASB - Answer- financial accounting standards board
3rd level of framework - Answer- constraints, assumptions, principles (CAP)
2nd level of framework - Answer- qualitative characteristics, elements
1st levee of framework - Answer- objective: to provide financial information useful to
capital providers
qualitative characteristics - Answer- DECISION USEFULNESS: 2 parts, relevance
and faithful representation
relevance - Answer- 3 parts: predictive, confirmatory value, materiality
pertinent to a decision at hand
faithful representation - Answer- 3 parts: completeness, neutrality, free from error,
conservatism
exists when there is an agreement between a measure and the phenomenon it
purports to represent
predictive value - Answer- info useful in predicting the future
confirmatory value - Answer- info confirms expectations
materiality - Answer- concerns relative size of an item and its effect on decisions
completeness - Answer- contains all necessary information
neutrality - Answer- freedom from bias
free from error - Answer- no errors or omissions
providers of financial information - Answer- profit oriented companies, not for profit
entities, households
external users of financial information - Answer- investors, creditors, employees,
banks, labor unions, customers, suppliers, gov regulatory agencies
conceptual framework - Answer- underlying structure for the development of
accounting standards
GAAP - Answer- generally accepted accounting principles- body of accounting
standards
FASB - Answer- financial accounting standards board
3rd level of framework - Answer- constraints, assumptions, principles (CAP)
2nd level of framework - Answer- qualitative characteristics, elements
1st levee of framework - Answer- objective: to provide financial information useful to
capital providers
qualitative characteristics - Answer- DECISION USEFULNESS: 2 parts, relevance
and faithful representation
relevance - Answer- 3 parts: predictive, confirmatory value, materiality
pertinent to a decision at hand
faithful representation - Answer- 3 parts: completeness, neutrality, free from error,
conservatism
exists when there is an agreement between a measure and the phenomenon it
purports to represent
predictive value - Answer- info useful in predicting the future
confirmatory value - Answer- info confirms expectations
materiality - Answer- concerns relative size of an item and its effect on decisions
completeness - Answer- contains all necessary information
neutrality - Answer- freedom from bias
free from error - Answer- no errors or omissions
