ABM CUP EASY

Information is said to be __________ if omitting it or misstating it could influence decisions that the primary users of general-purpose financial reports make based on those reports.

• Understandable

• Material

• Complete

• Timely

It is the qualitative characteristic of a financial information that enables users to identify and understand similarities in, and differences among items, amount or nature.

• Verifiability

• Comparability

• Understandability

• Timeliness

Generally, the older the information, the less useful it becomes. However, some information may continue to be timely long after the end of a reporting period because, for example, some users may need to identify and assess trends.

• Completeness

• Faithful representation

• Timeliness

• Verifiability

Financial statements are normally prepared on the assumption that business will continue in operation for the foreseeable future.

• Accrual Basis Assumption

• Going Concern Assumption

• Periodicity Assumption

• Monetary Unit Assumption

The information must be free of material error and bias, and not misleading.

• Materiality

• Faithful Representation

• Completeness

• Timeliness

The information must be comprehensible to users of the financial statements. This means that information must be clearly presented, with additional information supplied in the supporting footnotes as needed to assist in clarification.

• Understandability

• Relevance

• Completeness

• Timeliness

This accounting assumption tells us to recognize revenues and expenses as they are earned or incurred, rather than recording them when payment is received or made.

• Going Concern Assumption

• Accrual Basis Assumption

• Accounting Basis Assumption

• Periodicity Assumption

This accounting assumption suggests that a unit of measurement must be set and that all transactions or economic events be recorded in the books of a business in monetary terms by a currency.

• Monetary Unit Assumption

• Time-Period Assumption

• Cost-Benefit Constraint

• Accounting Entity Assumption

Transactions (like purchase of an asset) are required to be recorded at the cash amount or the equivalent at the time that it is required.

• Cost Principle

• Materiality Principle

• Matching Principle

• Revenue Recognition Principle

These are costs sacrificed to run the business operations that a company incurs to generate revenue.

• Assets

• Liabilities

• Expenses

• Drawings