Intermediate Accounting Exam
Questions Answered Correctly.
providers of financial information - Answer profit oriented companies, not for profit entities,
households
external users of financial information - Answer investors, creditors, employees, banks, labor unions,
customers, suppliers, gov regulatory agencies
conceptual framework - Answer underlying structure for the development of accounting standards
GAAP - Answer generally accepted accounting principles- body of accounting standards
FASB - Answer financial accounting standards board
3rd level of framework - Answer constraints, assumptions, principles (CAP)
2nd level of framework - Answer qualitative characteristics, elements
1st levee of framework - Answer objective: to provide financial information useful to capital providers
qualitative characteristics - Answer DECISION USEFULNESS: 2 parts, relevance and faithful
representation
relevance - Answer 3 parts: predictive, confirmatory value, materiality
pertinent to a decision at hand
faithful representation - Answer 3 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 - Answer info useful in predicting the future
confirmatory value - Answer info confirms expectations
materiality - Answer concerns relative size of an item and its effect on decisions
completeness - Answer contains all necessary information
neutrality - Answer freedom from bias
free from error - Answer no errors or omissions
conservatism - Answer accountants require greater verification before recognizing good news than bad
news
enhancing qualitative characteristics - Answer comparability, verifiability, timeliness and
understandability
comparability and consistency - Answer important for making interfirm comparisons
applying the same accounting practices overtime
verifiability - Answer consensus among different measures
timeliness - Answer information is available prior to a decision
Questions Answered Correctly.
providers of financial information - Answer profit oriented companies, not for profit entities,
households
external users of financial information - Answer investors, creditors, employees, banks, labor unions,
customers, suppliers, gov regulatory agencies
conceptual framework - Answer underlying structure for the development of accounting standards
GAAP - Answer generally accepted accounting principles- body of accounting standards
FASB - Answer financial accounting standards board
3rd level of framework - Answer constraints, assumptions, principles (CAP)
2nd level of framework - Answer qualitative characteristics, elements
1st levee of framework - Answer objective: to provide financial information useful to capital providers
qualitative characteristics - Answer DECISION USEFULNESS: 2 parts, relevance and faithful
representation
relevance - Answer 3 parts: predictive, confirmatory value, materiality
pertinent to a decision at hand
faithful representation - Answer 3 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 - Answer info useful in predicting the future
confirmatory value - Answer info confirms expectations
materiality - Answer concerns relative size of an item and its effect on decisions
completeness - Answer contains all necessary information
neutrality - Answer freedom from bias
free from error - Answer no errors or omissions
conservatism - Answer accountants require greater verification before recognizing good news than bad
news
enhancing qualitative characteristics - Answer comparability, verifiability, timeliness and
understandability
comparability and consistency - Answer important for making interfirm comparisons
applying the same accounting practices overtime
verifiability - Answer consensus among different measures
timeliness - Answer information is available prior to a decision
