Question

Homework 3: Ch1 6 Saved Help Listed below are several terms and phrases associated with the FASB's conceptual framework. Pair each item from List A with the item from List B that is most appropriately associated with it. List A List B 1. Predictive value 0.76 2 Relevance 3. Timeliness points 4. Distribution to owners Agreement between a measure and the phenomenon it purports to represent. eBook 5. Confirmatory value Applying the same accounting practices over time. 6. Understandability References Concerns the relative size of an item and its effect on decisions. 7. Gain Decreases in equity resulting from transfers to owners. 8. Faithful representation 9. Comprehensive income 10. Materiality 11. Comparablity 12. Neutrality 13. Recognition 14. Consistency 15. Cost effectiveness 16. Verifiability

Answer 1

1	Predictive value	Information 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	Decreases in equity resulting from transfers to owners.
5	Confirmatory value	The 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 nonowner transactions.
10	Materiality	Concerns the relative size of an item and its effect on decisions.
11	Comparability	Important for making interfirm comparisons.
12	Neutrality	The absence of bias.
13	Recognition	The process of admitting information into financial statements.
14	Consistency	Applying the same accounting practices over time.
15	Cost-effectiveness	Requires consideration of the costs and value of information.
16	Verifiability	Implies consensus among different measures.

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