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Differentiate the following; 1. Relevance vs. faithful representation 2. Predictive Value vs. confirmatory value 3. Neutrality vs free from error 4. Comparability vs Verifiability 5. Timeliness vs understandability

Enumerate the Following; 1. Fundamental Characteristics a) b)

2. Components/Aspects to Fundamental Characteristics a) b) c) d) e) f)

3. Enhancing Characteristics a) b) c) d)

Enumerate the Major steps in Accounting Cycle a) b) c) d) e) f) g) h) i)

Enumerate the different kinds of Source Documents 1. 2. 3. 4. 5. 6. 7.

Differentiate Accountable and Non-Accountable events

Differentiate General Journal vs General Ledger

Identification 1. Means that the information must possess predictive and/or confirmatory value, typically both. _________________ 2. It is the ability of the accounting data to predict or forecast values for decision making. ______________ 3. Implies that different knowledgeable and independent measures would reach consensus. ____________ 4. There are no errors or omissions in the description of the amount of the process used to report the amount._________________________ 5. Exists when there is agreement between measure or description and the phenomenon it purports to represent. _______________________________________ 6. Depends on a companys particular situation and is based on the nature or magnitude of the item that is being reported. _________________________________. 7. Ability to confirm or change the values that were predicted. ________________________ 8. Can be achieved if uniform standard or process is being followed all through the years of the company to compare the accounts being measured with such. _____________________________ 9. Users must be able to comprehend the information within the context of the decision being made. _____________________ 10. Information is available to users early enough to allow them to use it for their decision making. __________________________________________ 11. Includes ALL the information necessary for faithful representation of the economic phenomena that it purports to represent. ____________________________ 12. A financial accounting standard, states that process is free from bias. 13. Process that includes identifying, collecting and analyzing documents and transactions, recording the transactions on the journals, posting the journalized amounts to accounts in the general and subsidiary ledgers. _____________________________ 14. Are transactions that transpired in a given accounting period wherein such have affected the assets, liabilities or the equity of the business. _____________________________ 15. Are events that though transpired in the ordinary course of doing business, such cannot affect the assets, liabilities or equity at that given date. __________________________ 16. Important to bookkeeping and accounting process because they serve as physical evidence that a financial transaction actually occurred. ____________________________ 17. These are documents listing goods or services provided, as well as their prices. ___________________ 18. These are documents confirming that cash or goods have been received. ____________________ 19. A document issued by the seller of goods or services to the buyer, reducing the amount that the buyer owes to the seller under the terms of an earlier invoice. ___________________________ 20. Those receipts that are machine validated and are issued to buyers. __________________________ 21. Is a specialized accounting journal and it is referred to as the main entry book used in accounting system tokeep track of the sales of items when cash is received. ___________________________________ 22. Is a specialized accounting and it is also a prime entry which is used in an accounting system to keep track of the orders of items placed using accounts payable. __________________________________ 23. A specialized accounting journal to keep up the sale of items that customers have purchased on account._______________________________ 24. Is a set of numbered accounts a business uses to keep track of its financial transactions to prepare financialreports. It summarizes each type of assets, liabilities, equity, revenue and expenses.___________________________ 25. A record kept by internal accountants to all financial expenditures made by the company._________________________

Match the qualitative characteristics below with the following statements. 1. Relevance 2. Faithful representation 3. Predictive value 4. Confirmatory value 5. Comparability 6. Completeness 7. Neutrality 8. Timeliness

(a) Quality of information that permits users to identify similarities in and differences between two sets of economic phenomena. (b) Having information available to users before it loses its capacity to influence decisions. (c) Information about an economic phenomenon that has value as an input to the processes used by capital providers to form their own expectations about the future. (d) Information that is capable of making a difference in the decisions of users in their capacity as capital providers. (e) Absence of bias intended to attain a predetermined result or to induce a particular behavior. Match the qualitative characteristics below with the following statements. 1. Timeliness 2. Completeness 3. Free from error 4. Understandability 5. Faithful representation 6 Relevance 7. Neutrality 8. Confirmatory value (a) Quality of information that assures users that information represents the economic phenomena that it purports to represent. (b) Information about an economic phenomenon that changes past or present expectations based on previous evaluations. (c) The extent to which information is accurate in representing the economic substance of a transaction. (d) Includes all the information that is necessary for a faithful representation of the economic phenomena that it purports to represent. (e) Quality of information that allows users to comprehend its meaning. (Qualitative Characteristics) Accounting information provides useful information about business transactions and events. Those who provide and use financial reports must often select and evaluate accounting alternatives. The Conceptual Framework examines the characteristics of accounting information that make it useful for decision-making. It also points out that various limitations inherent in the measurement and reporting process may necessitate trade-offs or sacrifices among the characteristics of useful information.

Instructions Discuss the propriety of timing the recognition of revenue in Piper Publishing Companys accounts with respect to the following. (a) The cash sale of the magazine subscription. (b) The publication of the magazine every month. (c) Both events, by recognizing a portion of the revenue with the cash sale of the magazine subscription and a portion of the revenue with the publication of the magazine every month.

(Qualitative Characteristics) Accounting information provides useful information about business transactions and events. Those who provide and use financial reports must often select and evaluate accounting alternatives. The Conceptual Framework examines the characteristics of accounting information that make it useful for decision-making. It also points out that various limitations inherent in the measurement and reporting process may necessitate trade-offs or sacrifices among the characteristics of useful information.

Instructions

(a) Describe briefly the following characteristics of useful accounting information. (1) Relevance. (4) Comparability (consistency). (2) Faithful representation. (5) Neutrality. (3) Understandability.

(b) For each of the following pairs of information characteristics, give an example of a situation in which one of the characteristics may be sacrificed in return for a gain in the other. (1) Relevance and faithful representation. (3) Comparability and consistency. (2) Relevance and consistency. (4) Relevance and understandability. (c) What criterion should be used to evaluate trade-offs between information characteristics?Recorded in the general journal.