Question

Listed below are several terms and phrases associated with the FASB's conceptual framework. Pair each item from List A with from List B that is most appropriately associated with it. List B List A 1. Predictive value 2. Relevance 3. Timeliness 4. Distribution to owners 5. Confirmatory value 6. Understandability 7. Gain 8. Faithful representation 9. Comprehensive income 10. Materiality 11. Comparability 12. Neutrality 13. Recognition 14 Consistency 15. Cost effectiveness 16. Veritability

Answer 1

SOLUTION

S.No.	List A	List B
1.	Predictive value	Infromation is useful in predicting the future
2.	Relevance	Pertinent to the decision at hand
3.	Timeliness	Information is available prior to the decision
4.	Distribution to owners	Decrease in equity resulting from transfers to owners
5.	Confirmatory value	Information confirms expectations
6.	Understandability	Users understand the information in the context of the decision being made
7.	Gain	Results if an asset is sold for more than its book value
8.	Faithful representation	Agreement between a measure and the phenomenon it purports to represent.
9.	Comprehensive income	The change in equity from non owner transactions
10.	Materiality	Concerns the relative size of an item and it effects on decisions.
11.	Comparability	Imfortant for making interfirm comparisons
12.	Neutrality	The absence of bias
13.	Recognition	The process of admitting information into financial statement
14.	Consistency	Applying the same accounting practices over time.
15.	Cost effectiveness	Requires consideration of the cost and value of information.
16.	Verifiability	Implies consensus among different measures.