Question

Match each term or phrase to its description below. Whether an item is large enough to likely influence the decision of an investor or creditor. a ê Constraint that weighs the cost that companies will incur to provide the information against the benefit that financial statement users will gain from having the information available. Obligations that a company expects to pay within the next year or operating cycle, whichever is longer. Information that is complete, neutral, and free from error. Ô The primary accounting standard-setting body in the United States. E Do Net cash provided by operating activities after adjusting for capital expenditures and cash dividends paid. A set of accounting standards that has substantial authoritative support and which guide accounting professionals. The ability of a company to pay obligations that are expected to become due within the next yea or operating cycle. The average time required to purchase inventory, sell it on account, and then collect cash from customers-that is, go from cash to cash. į 3 3 The quality of information that indicates the information makes a difference in a decision. 2 The agency of the U.S. government that oversees U.S.financial markets and accounting standard-setting bodies. The quality of information that occurs when independent observers, using the same methods, obtain similar results. 5 5 The difference between the amounts of current assets and current liabilities. The ability of a company to pay interest as it comes due and to repay the balance of a debt due at its maturity. z

The options to select from are:

Solvency

Cost Constriant

Faithful Representation

Relevance

Free Cash Flow

Securities and Exchange Commission SEC

Current Liabilities

Liquidity

Verfiable

Working Capital

Generally accepted Accounting Principles GAAP

Materiality

Operating Cycle

Answer 1

Answer -

Matching each term to its description

	Term	Description
(a)	Materiality	Whether an item is large enough to likely influence the decision of an investor or creditor.
(b)	Cost Constraint	Constraint that weighs the cost that companies will incur to provide the information against the benefit that financial statement users will gain from having the information available.
(c)	Current Liabilities	Obligations that a company expects to pay within the next year or operating cycle, whichever is longer.
(d)	Faithful Representation	Information that is complete, neutral, and free from error.
(e)	Financial accounting Standards Board (FASB)	The primary accounting standard-setting body in the United States.
(f)	Free Cash Flow	Net cash provided by operating activities after adjusting for capital expenditures and cash dividends paid.
(g)	Generally Accepted Accounting Principles (GAAP)	A set of accounting standards that have substantial authoritative support, that guide accounting professionals.
(h)	Liquidity	The ability of a company to pay obligations that are expected to become due within the next year or operating cycle.
(i)	Operating Cycle	The average time required to purchase inventory, sell it on account, and then collect cash from customers-that is, go from cash to cash.
(j)	Relevance	The quality of information that indicates the information makes a difference in a decision.
(k)	Securities & Exchange Commission (SEC)	The agency of the U.S. government that oversees U.S. financial markets and accounting standard-setting bodies.
(l)	Verifiable	The quality of information that occurs when independent observers, using the same methods, obtain similar results.
(m)	Working Capital	The difference between the amounts of current assets and current liabilities.
(n)	Solvency	The ability of a company to pay interest as it comes due and to repay the balance of debt due at its maturity.