Useful Information definitions Flashcards
Useful Information definitions
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Relevance Quality of information that influences users' decisions by providing predictive and confirmatory value. Predictive Value Ability of information to help users forecast future outcomes or trends. Confirmatory Value Capacity of information to validate or refute previous predictions made by users. Faithful Representation Quality ensuring information is complete, unbiased, and free from significant errors. Completeness Extent to which all necessary and relevant details are included in the information provided. Neutrality Absence of bias in information, ensuring it is presented without favoring any side. Material Error Significant inaccuracy in information that could influence users' decisions, depending on company size. Comparability Characteristic allowing information to be consistently evaluated across different companies and time periods. Verifiability Quality that enables independent confirmation of information accuracy through evidence or audit. Timeliness Availability of information to users early enough to impact their decision-making process. Understandability Clarity and transparency of information, making it easily comprehensible to users. Monetary Unit Assumption Presumption that financial records use a stable currency, disregarding inflation effects. Economic Entity Assumption Separation of business activities from those of owners or other entities in financial reporting. Periodicity Assumption Division of a company's economic life into consistent time intervals for reporting purposes. Going Concern Assumption Expectation that a business will continue operating indefinitely, not liquidating in the near future. Historical Cost Principle Requirement to record assets at their original purchase price, regardless of current market value. Fair Value Principle Mandate to report certain assets at their current market value, reflecting up-to-date worth. Full Disclosure Principle Obligation to reveal all information that could affect users' decisions, beyond just numerical data. Cost Constraint Limitation where the benefit of providing information must outweigh the cost of obtaining it.