Problems

 

P 1-1.             FASB Statement of Concepts No. 2 indicates several qualitative characteristics of useful accounting infor- mation. Following is a list of some of these qualities, as well as a list of statements and phrases describing the qualities.

a.      Benefits > costs                                                               f. Verifiability, neutrality,

b.     Decision usefulness                                                              representational faithfulness

c.      Relevance                                                                            g. Comparability

d.     Reliability                                                                         h. Materiality

e.      Predictive value, feedback value, timeliness           i.    Relevance, reliability

            1.   Without usefulness, there would be no benefits from information to set against its   cost.

            2.   Pervasive constraint imposed upon financial accounting  information.

            3.   Constraint that guides the threshold for  recognition.

            4.  A quality requiring that the information be timely and that it also have predictive value, or feed- back value, or  both.

            5.   A quality requiring that the information have representational faithfulness and that it be   verifi- able and neutral.

            6.   These are the two primary qualities that make accounting information useful for decision making.

            7.  These are the ingredients needed to ensure that the information is relevant.

            8.  These are the ingredients needed to ensure that the information is  reliable.

            9.   Includes consistency and interacts with relevance and reliability to contribute to the usefulness of  information.

 

 

 

Required           Place the appropriate letter identifying each quality on the line in front of the statement or phrase   describ- ing the quality.

 

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