Chapter 2, Problem 2.3DIE

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