Financial Acct Chapter 2 WileyPlus

The convention of consistency refers to consistent use of accounting principles:

from period to period.

One of the reasons that makes accounting numbers difficult to compare across companies is:

- different year-end. - differences in size. - differences in products and markets.

The periodicity assumption states that the economic life of a business can be divided into:

artificial time periods.

Many companies choose end of year to:

coincide with period of low business activity.

If investors do not have faith in a company's financial statements, they will:

discount the price of the company's stocks.

Accounting information should be neutral in order to enhance:

faithful representation.

Accounting information should be verifiable in order to enhance:

faithful representation.

The full disclosure principle dictates that:

financial statements should disclose all events and circumstances that would matter to users of financial statements.

In order for accounting information to be relevant, it must:

help predict future events or confirm prior expectations.

An item is considered material if:

its size is likely to influence the decision of an investor or creditor.

The two fundamental qualities of useful information are:

relevance and faithful representation.

For accounting information to have relevance, it must be:

timely.

Information that is presented in a clear fashion, so that users of that information can interpret it, is an example of:

understandability.