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Posted: August 30th, 2020
Kaplan University AC 300 Identify the appropriate qualitative characteristic(s) to be used for
Exercise 2-4Identify the appropriate qualitative characteristic(s) to be used for given the information providedbelow.(a)(b)(c)(d)(e)(f)Qualitativecharacteristic beingemployedwhencompaniesin thesameindustryare usingthe sameaccountingprinciples.Quality ofinformation thatconfirmsusersâearlierexpectations.Imperativeforprovidingcomparisons of acompanyfromperiod toperiod.Ignorestheeconomicconsequences of astandardor rule.Requires ahighdegree ofconsensusamongindividualson a givenmeasurement.Predictivevalue is aningredientof thisfundamental qualityofinformation.(g)(h)(i)(j)(k)Arisesfromperipheral orFourqualitativecharacteristics thatarerelated tobothrelevanceandfaithfulrepresentation.An item isnotrecordedbecauseits effecton incomewould notchange adecision.Neutralityis aningredientof thisfundamental qualityofaccountinginformation.Twofundamentalqualitiesthat makeaccountinginformation usefulfordecisionmakingpurposes.Issuanceof interimreports isanexampleof whatenhancingquality ofrelevance?incidentaltransactions.(b)Obligation to transfer resourcesarising from a past transaction.(c)Increases ownership interest.(d)Declares and pays cash dividendsto owners.(e)Increases in net assets in a periodfrom nonowner sources.(f)Items characterized by servicepotential or future economicbenefit.Equals increase in assets lessliabilities during the year, afteradding distributions to owners andsubtracting investments byowners.Arises from income statementactivities that constitute theentityâs ongoing major or centraloperations.Residual interest in the assets ofthe enterprise after deducting itsliabilities.Increases assets during a periodthrough sale of product.(g)(h)(i)(j)(k)(l)Decreases assets during the periodby purchasing the companyâs ownstock.Includes all changes in equityduring the period, except thoseresulting from investments byowners and distributions to owners.
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