Chapter 1, Problem 1.7E

Concepts; terminology; conceptual framework

• LO1–7

Listed below are several terms and phrases associated with the FASB’s conceptual framework. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it.

List A	List B
____ 1. Predictive value	a. Decreases in equity resulting from transfers to owners.
____ 2. Relevance	b. Requires consideration of the costs and value of information.
____ 3. Timeliness	c. Important for making interfirm comparisons.
____ 4. Distribution to owners	d. Applying the same accounting practices over time.
____ 5. Confirmatory value	e. Users understand the information in the context of the decision being made.
____ 6. Understandability	f. Agreement between a measure and the phenomenon it purports to represent.
____ 7. Gain	g. Information is available prior to the decision.
____ 8. Faithful representation	h. Pertinent to the decision at hand.
____ 9. Comprehensive income	i. Implies consensus among different measurers.
____ 10. Materiality	j. Information confirms expectations.
____ 11. Comparability	k. The change in equity from nonowner transactions.
____ 12. Neutrality	l. The process of admitting information into financial statements.
____ 13. Recognition	m. The absence of bias.
____ 14. Consistency	n. Increases in equity from peripheral or incidental transactions of an entity.
____ 15. Cost effectiveness	o. Information is useful in predicting the future.
____ 16. Verifiability	p. Concerns the relative size of an item and its effect on decisions.