ACCOUNTING PRINCIPLES 15TH EDITION FULL
SOLUTION STUDY GUIDE
◉ What are the three criteria for accepted accounting principles?
Answer: Relevance, objectivity, and feasibility
◉ Define relevance in accounting.
Answer: The ability of information to provide a meaningful and
useful result.
◉ What does objectivity mean in accounting?
Answer: Information that is not influenced by personal bias and is
based on solid evidence.
◉ What is feasibility in the context of accounting principles?
Answer: The ability to implement a principle without undue
complexity or cost.
◉ What is the entity concept?
Answer: Each entity should be evaluated separately, separating
owners from the business.
, ◉ What does the periodicity concept entail?
Answer: Divides the life of an entity into equal time periods for
timely data.
◉ Explain the stable monetary unit concept.
Answer: Treats currency amounts as having the same purchasing
power, ignoring inflation effects.
◉ What is the going concern assumption?
Answer: Financial statements are prepared assuming the business
will continue to operate in the foreseeable future.
◉ What are the fundamental qualitative characteristics of financial
information?
Answer: Relevance and faithful representation.
◉ What does faithful representation include?
Answer: Completeness, neutrality, and freedom from error.
◉ List the enhancing qualitative characteristics.
Answer: Comparability, consistency, verifiability, timeliness, and
understandability.
SOLUTION STUDY GUIDE
◉ What are the three criteria for accepted accounting principles?
Answer: Relevance, objectivity, and feasibility
◉ Define relevance in accounting.
Answer: The ability of information to provide a meaningful and
useful result.
◉ What does objectivity mean in accounting?
Answer: Information that is not influenced by personal bias and is
based on solid evidence.
◉ What is feasibility in the context of accounting principles?
Answer: The ability to implement a principle without undue
complexity or cost.
◉ What is the entity concept?
Answer: Each entity should be evaluated separately, separating
owners from the business.
, ◉ What does the periodicity concept entail?
Answer: Divides the life of an entity into equal time periods for
timely data.
◉ Explain the stable monetary unit concept.
Answer: Treats currency amounts as having the same purchasing
power, ignoring inflation effects.
◉ What is the going concern assumption?
Answer: Financial statements are prepared assuming the business
will continue to operate in the foreseeable future.
◉ What are the fundamental qualitative characteristics of financial
information?
Answer: Relevance and faithful representation.
◉ What does faithful representation include?
Answer: Completeness, neutrality, and freedom from error.
◉ List the enhancing qualitative characteristics.
Answer: Comparability, consistency, verifiability, timeliness, and
understandability.
