Basic Assumptions, Principles, and Terminology in the Conceptual Framework

For each description, select the correct key term.

DescriptionTerma. Refers to whether or not a particular amount is large enough to affect a decision.Answer $1$Accounting periodComparabilityEconomic entityGoing concernMaterialityMonetary unitRelevanceRepresentational faithfulnessTimelinessVerifiabilityb. The activities of a business are considered to be independent and distinct from those of its owners or from other companies.Answer $2$Accounting periodComparabilityEconomic entityGoing concernMaterialityMonetary unitRelevanceRepresentational faithfulnessTimelinessVerifiabilityc. Accounting information should enable users to identify similarities and differences between sets of economic phenomena.Answer $3$Accounting periodComparabilityEconomic entityGoing concernMaterialityMonetary unitRelevanceRepresentational faithfulnessTimelinessVerifiabilityd. Financial reporting information must be available to decision makers before it loses its capacity to influence decisions.Answer $4$Accounting periodComparabilityEconomic entityGoing concernMaterialityMonetary unitRelevanceRepresentational faithfulnessTimelinessVerifiabilitye. Information is useful if it has the ability to influence decisions.Answer $5$Accounting periodComparabilityEconomic entityGoing concernMaterialityMonetary unitRelevanceRepresentational faithfulnessTimelinessVerifiabilityf. Consensus among measures assures that the information is free of error.Answer $6$Accounting periodComparabilityEconomic entityGoing concernMaterialityMonetary unitRelevanceRepresentational faithfulnessTimelinessVerifiabilityg. Accounting information should reflect the underlying economic events that it purports to measure.Answer $7$Accounting periodComparabilityEconomic entityGoing concernMaterialityMonetary unitRelevanceRepresentational faithfulnessTimelinessVerifiabilityh. The financial reports are presented in one consistent monetary unit, such as U$.$S$.$ dollars.Answer $8$Accounting periodComparabilityEconomic entityGoing concernMaterialityMonetary unitRelevanceRepresentational faithfulnessTimelinessVerifiabilityi. A business is expected to have continuity in that it is expected to continue to operate indefinitely.Answer $9$Accounting periodComparabilityEconomic entityGoing concernMaterialityMonetary unitRelevanceRepresentational faithfulnessTimelinessVerifiabilityj. The life of a business can be divided into discrete accounting periods such as a year or quarter.