GAAP Principles Flashcards
(12 cards)
Relevance
A fundamental
qualitative characteristic
describing information that
makes a difference/influence a user’s
decision. It should have
predictive value, confirmatory
value, or both, and be material.
Faithful representation
A fundamental qualitative
characteristic describing
information that represents
economic reality. It must be
complete, neutral, and free from
material error.
Comparability
An enhancing qualitative characteristic of useful information that enables users to identify and understand similarities in, and differences among, items.
Verifiability
An enhancing
qualitative characteristic of
useful information that means
that different knowledgeable and
independent users could reach a
consensus that the information is
faithfully represented.
Timeliness
An enhancing
qualitative characteristic of
useful information that means
that information is available
to decision-makers in time to
be capable of influencing their
decisions. Available before it loses its usefulness in decision-making
Understandability
An enhancing qualitative
characteristic of useful
information that means
that information is clearly
and concisely classified,
characterized, and presented.
Predictive value
it helps users make predictions about future events
Confirmatory value
Helps users confirm or correct their previous predictions or expectations
Materiality
Information is material if its omis-
sion or misstatement could influence the decisions of users. determined in
terms of magnitude (normally dollar value) and/or nature (what the information relates to)
Complete
nothing important was
omitted
Neutral
not biased toward one position or another
Free from material error
provides an accurate description, and no errors were made in the process used to determine it
