The qualitative characteristics outlined in the FASB's conceptual framework include: Enhancing Characteristics Fundamental characteristics Faithful Relevance Representation Confirmatory value completeness Predictive value Neutrality Materiality Freedom from error Comparability Verifiability Timeliness Understandability Required: Select the qualitative characteristic that best applies to each of the following independent situations. (Note: Each of the 10 characteristics is used once and only once.) 1 5. In deciding whether to invest in Southwest Airlines of American Airlines, investor evaluate the companies income statements Comparability 2 To provide the most reliable information about future salos, Walmart's management unes an appropriato process understandability to estimate the decline in inventory value each year. 3. in deciding whether to loan money, Wells Fargo uses balance shoot information to forecast the probability of bankruptcy 4. IBM is required to issue public financial statements within 60 days of its year-end Timeliness Employees of Starbucks can use the company's financial statements to analyze the efficiency with which management has conducted operations over the past year. When first requiring firms to prepare a statement of cash flows, the FASB's intent was not to discourage or Freedom from error promote investment in the automobile industry 7. When Harley-Davidson reports revenue for the year, the amount includes sales not only in the United States but also those outside the United States. 8. The amount of total assets reported by General Mills can be substantiated by its auditors. 9 The Cheesecake Factory prepares its balance sheet in a clear format using basic accounting terminology to allow Completeness users to easily comprehend the company's assets, liabilities, and stockholders' equity Target prepays $600 to rent a post office box for the next six months and decides to record the entire payment to 6 10. The qualitative characteristics outlined in the FASB's conceptual framework include: Enhancing Characteristics Fundamental characteristics Relevance Faithful Representation Confirmatory value completeness Predictive value Neutrality Materiality Freedom from error Comparability Verifiability Timeliness Understandability Required: Select the qualitative characteristic that best applies to each of the following independent situations. (Note: Each of the 10 characteristics is used once and only once.) 5 6 In deciding whether to invest in Southwest Airlines of American Airlines, investors evaluate the companies Comparability Income statements To provide the most reliable information about futuro sales, Walmart's management uses an appropriate process 2 Understandability to estimate the decline in inventory value each year. In deciding whether to loan money, Wells Fargo uses balance sheet information to forecast the probability of 3. bankruptcy 4. IBM is required to issue public financial statements within 60 days of its year-end. Timeliness Employees of Starbucks can use the company's financial statements to analyze the efficiency with which management has conducted operations over the past year. When first requiring firms to prepare a statement of cash flows, the FASB's intent was not to discourage or promote investment in the automobile industry Freedom from error 7. When Harley-Davidson reports revenue for the year, the amount includes sales not only in the United States but also those outside the United States. 8. The amount of total assets reported by General Mills can be substantiated by its audito 9. The Cheesecake Factory prepares its balance sheet in a clear format using basic accounting terminology to allow users to easily comprehend the company's assets, liabilities, and stockholders' equity. Completeness 10 Target prepays 5000 to rent a post office box for the next six months and decides to record the entire payment to Rent Expense (instead of Prepaid Rent) in the current month
