Accounting Assumptions & Qualitative Characteristics

Question 1

An asset is defined in accounting terms as

Accepted Answer

A resource controlled by the business which will bring economic benefit

Question 2

Reports are prepared for a particular period of time, (eg monthly) to obtain comparable results

Accepted Answer

Period assumption

Question 3

financial information reported is a faithful representation of the economic event it represents

Accepted Answer

Faithful Representation Characteristic

Question 4

the business will continue to operate in the future and its records are kept on that basis

Accepted Answer

Going Concern Assumption

Question 5

Useful information can be provided when business financial reports can be compared over time

Accepted Answer

Comparability Qualitative Characteristic

Question 6

Financial information should be understandable to users with reasonable knowledge (clear)

Accepted Answer

Understandable Qualitative Characteristic

Question 7

Elements of reports recognized when criteria satisfied and then profit calculated for period

Accepted Answer

Accrual basis Assumption

Question 8

ensures that different and independent observers agree that an event is faithfully represented

Accepted Answer

Verifiability Qualitative Characteristic

Question 9

The qualities of the information in Accounting reports are

Accepted Answer

Qualitative Characteristics

Question 10

The generally accepted rules which govern the way Accounting information is recorded are...

Accepted Answer

Accounting Assumptions

Question 11

Financial information made available to decision makers in time to influence decision-makers

Accepted Answer

Timeliness Qualitative Characteristic

Question 12

Financial information must be capable of making a difference to the decisions made by the users

Accepted Answer

Relevance Qualitative Characteristic

Question 13

Owners Equity is defined as

Accepted Answer

Residual interest in assets after liabilities are deducted

Question 14

the records of assets, liabilities and business activities are kept separate from the owners

Accepted Answer

Accounting Entity Assumption

Question 15

A liability is defined in accounting terms as

Accepted Answer

A present obligation which requires the transfer of economic benefit.

Questions 15