The following characteristics, assumptions, principles, and constraint guide the FASB when it creates accounting standards.

Relevance Periodicity assumption Faithful representation Going concern assumption Comparability Historical cost principle Consistency Full disclosure principle Monetary unit assumption Materiality Economic entity assumption Cost constraint Match each item above with a description below. 1. __________ Items not easily quantified in dollar terms are not reported in the financial statements. 2. __________ Accounting information must be complete, neutral, and free from error. 3. __________ Personal transactions are not mixed with the company’s transactions. 4. __________ The cost to provide information should be weighed against the benefit that users will gain from having the information available. 5. __________ A company’s use of the same accounting principles from year to year. 6. __________ Assets are recorded and reported at original purchase price. 7. __________ Accounting information should help users predict future events, and should confirm or correct prior expectations. 8. __________ The life of a business can be divided into artificial segments of time. 9. __________ The reporting of all information that would make a difference to financial statement users. 10. __________ The judgment concerning whether an item’s size makes it likely to influence a decision-maker. 11. __________ Assumes a business will remain in operation for the foreseeable future. 12. __________ Different companies use the same accounting principles.

AppendixLO1