'That Quality of Financial Information Which Exists When That Information

question 8

Multiple Choice

'That quality of financial information which exists when that information can be depended upon to represent faithfully,and without bias or undue error,the transactions or events that it purports to represent or could reasonably be expected to represent' (The Framework para.31) ,is:

• A) understandability
• B) reliability
• C) timeliness
• D) comparability

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Definitions:

Permanent/Temporary

Classification of accounts; permanent accounts are balance sheet accounts that carry their ending balances into the next accounting period, while temporary accounts are closed and zeroed out at the end of each period.

Normal Balance

The side (debit or credit) on which increases are recorded in an account, based on the type of account.

Financial Statement

Reports that present the financial performance, position, and cash flows of a business for a specified period.

Permanent/Temporary

Terms used to distinguish between accounts or items that either persist over multiple accounting periods (permanent) or exist for only one period (temporary).