Match Each of the Principles and Phases in the Development

question 24

Essay

Match each of the principles and phases in the development of an accounting system with the statement that best describes them.
a. Cost-effectiveness
b. Flexibility
c. Usefulness
_____ 1. Information must be understandable, relevant, reliable, timely, and accurate.
_____ 2. Benefits of information must outweigh the cost of providing it.
_____ 3. The system should accommodate a variety of users and changing information needs.
_____ 4. The accounting system must consider the needs and knowledge of various users.
_____ 5. The system should be capable of meeting the changes in the demands made upon it.

---

Definitions:

Profitability Ratios

Financial metrics used to evaluate a company's ability to generate profit relative to its revenue, assets, equity, or other financial metrics.

Net Income

The total profit of a company after all expenses and taxes have been deducted from total revenues; also known as net earnings or net profit.

Equity

Represents the shareholder's ownership interest in a company, calculated as the difference between total assets and total liabilities.

Debt-Equity Ratio

An evaluation of corporate leverage, calculated by the division of a company's total liabilities by the equity of its shareholders.