According to the FASB, the Usefulness of Accounting Is Judged

question 114

Multiple Choice

According to the FASB, the usefulness of accounting is judged by which of the following two prime qualitative characteristics of accounting information?

• A) Comparability and neutrality
• B) Understandability and comparability
• C) Verifiability and timeliness
• D) Relevance and reliability

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Definitions:

Closing Price

The final price at which a security is traded on a given trading day, often used for performance assessment.

Default Risk Premium

The additional return that an investor demands for taking on the risk that the borrower may default on the loan.

Liquidity Risk Premium

An additional return that investors require for holding securities with less liquidity, compensating for the risk of not being able to sell quickly at the fair market price.

Inflation Rate

The speed at which the average price of goods and services increases, leading to a decrease in buying power.