Intermediate Accounting Exam #1 Questions With 100% Correct Answers

Intermediate Accounting Exam #1 Questions With 100% Correct Answers providers of financial information - answerprofit oriented companies, not for profit entities, households external users of financial information - answerinvestors, creditors, employees, banks, labor unions, customers, suppliers, gov regulatory agencies conceptual framework - answerunderlying structure for the development of accounting standards GAAP - answergenerally accepted accounting principles- body of accounting standards FASB - answerfinancial accounting standards board 3rd level of framework - answerconstraints, assumptions, principles (CAP) 2nd level of framework - answerqualitative characteristics, elements 1st levee of framework - answerobjective: to provide financial information useful to capital providers qualitative characteristics - answerDECISION USEFULNESS: 2 parts, relevance and faithful representation relevance - answer3 parts: predictive, confirmatory value, materiality pertinent to a decision at hand faithful representation - answer3 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 - answerinfo useful in predicting the future confirmatory value - answerinfo confirms expectations materiality - answerconcerns relative size of an item and its effect on decisions completeness - answercontains all necessary information neutrality - answerfreedom from bias free from error - answerno errors or omissions conservatism - answeraccountants require greater verification before recognizing good news than bad n