BUS 321 MIDTERM 1 VERIFIED STUDY GUIDE
Predictive value - Answers - Information is useful in predicting the future.
Relevance - Answers - Pertinent to the decision at hand.
Timeliness - Answers - Information is available prior to the decision.
Distribution to owners - Answers - Decreases in equity resulting from transfers to the
owners.
Confirmatory value - Answers - Information confirms expectations.
Understandability - Answers - Users understand the information in the context of the
decision being made.
Gain - Answers - Results if an asset is sold for more than its book value.
Faithful representation - Answers - Agreement between a measure and the
phenomenon it purports to represent.
Comprehensive income - Answers - The change in equity from the nonowner
transactions.
Materiality - Answers - Concerns the relative size of an item and its effect on decisions.
Comparability - Answers - Important for making interfirm comparisons.
Neutrality - Answers - The absence of bias.
Recognition - Answers - The process of admitting information into financial statements.
Consistency - Answers - Applying the same accounting practices over time.
Cost effectiveness - Answers - Requires consideration of the costs and value of
information.
Verifiability - Answers - Implies consensus among different measures.
Matching principle - Answers - Record expenses in the period the related revenue is
recognized.
Periodicity - Answers - The life of an enterprise can be divided into artificial time
periods.
Predictive value - Answers - Information is useful in predicting the future.
Relevance - Answers - Pertinent to the decision at hand.
Timeliness - Answers - Information is available prior to the decision.
Distribution to owners - Answers - Decreases in equity resulting from transfers to the
owners.
Confirmatory value - Answers - Information confirms expectations.
Understandability - Answers - Users understand the information in the context of the
decision being made.
Gain - Answers - Results if an asset is sold for more than its book value.
Faithful representation - Answers - Agreement between a measure and the
phenomenon it purports to represent.
Comprehensive income - Answers - The change in equity from the nonowner
transactions.
Materiality - Answers - Concerns the relative size of an item and its effect on decisions.
Comparability - Answers - Important for making interfirm comparisons.
Neutrality - Answers - The absence of bias.
Recognition - Answers - The process of admitting information into financial statements.
Consistency - Answers - Applying the same accounting practices over time.
Cost effectiveness - Answers - Requires consideration of the costs and value of
information.
Verifiability - Answers - Implies consensus among different measures.
Matching principle - Answers - Record expenses in the period the related revenue is
recognized.
Periodicity - Answers - The life of an enterprise can be divided into artificial time
periods.
