This section is almost philosophical in nature. How can information be useful? We will first define some general characteristics about useful information. Then, we will relate it to accounting.

Concept #1: Fundamental Qualitative Characteristics

Concept #2: Enhancing Characteristics

Concept #3: Four Underlying Assumptions

Concept #4: Principles of Financial Accounting

Additional Problems
Which accounting assumption assumes that an enterprise will continue in operation long enough to carry out its existing objectives and commitments? a. Monetary unit assumption b. Economic entity assumption c. Time period assumption d. Going concern assumption e. None of the options listed
The principle which states that assets acquired by the business should be recorded at their exchange price is the: a. matching principle b. revenue recognition principle c. cost principle d. objectivity principle
The business entity concept means that: a. the business entity is considered a separate entity apart from the owner or owners b. the business entity is organized according to the rules determined by the IRS c. the business entity is organized according to the rules determined by the FASB d. the owner of the business entity and the business entity are treated the same from a legal and accounting viewpoint
The owner of Seafood Restaurant purchased a new personal residence at a cost of $150,000 and debited this amount to the Buildings account in the restaurant's accounting records. The recording of this transaction in this manner violates the: a. Cost principle. b. Principle of the business entity. c. Objectivity principle. d. Going-concern assumption.
German companies prepare their financial reports in terms of euros whereas Japanese companies report results in yen. This practice is an example of the: a. Historical cost principle b. Materiality constraint c. Full disclosure principle d. Unit-of- Measure
Although income is earned continuously, companies measure income for a specific period of time. Accountants refer to this practice as: a. unit of measure assumption. b. time period assumption. c. matching principle d. continuity assumption.