Objective and Qualitative Characteristics of Financial Reporting

Vocabulary flashcards covering the FASB qualitative characteristics, assumptions, principles, and constraints of financial reporting.

Comparability

Ability to easily evaluate one company's results relative to another's.

Going Concern Assumption

Requirement that a company will continue to operate for the foreseeable future.

Materiality

The judgment concerning whether an item's size is large enough to matter to decision-makers.

Full Disclosure Principle

The reporting of all information that would make a difference to financial statement users.

Time Period Assumption

The practice of preparing financial statements at regular intervals.

Relevance

The quality of information that indicates the information makes a difference in a decision.

Historical Cost Principle

A belief that items should be reported on the balance sheet at the price that was paid to acquire them.

Consistency

A company's use of the same accounting principles and methods from year to year.

Economic Entity Assumption

Tracing accounting events to particular companies.

Faithful Representation

The desire to minimize bias in financial statements.

Monetary Unit Assumption

Reporting only those things that can be measured in monetary units.

Expense Recognition Principle

Dictates that efforts (expenses) be recognized in the period in which a company uses assets or incurs liabilities to generate results (revenues).