BUS1 121A Study Guide - Fall 2019, Comprehensive Final Exam Notes - Standard Accounting Practice, Depreciation, Retained Earnings
Document Summary
1933 & 1934 securities acts: created sec, require annual financial info release. Opinions (wasn"t required: replaced the 1939 committee full-time. Accountants can only give an unqualified opinion on financial statements if they are prepared using gaap. Relevance: relevance, faithful representation, predictive value, confirmatory value, materiality. Knowledge of past events provides a basis for making judgements about the future. Can confirm past expectations & update them according to actual events. An amount is material if it is large enough to impact a user"s decision: completeness, neutrality, free from error. All relevant info concerning economic affairs of the entity necessary to give faithful representation should be reported. Info is free from bias & is objective. Accounting info must be free of material errors. Enables users to identify similarities & differences btwn companies. Info is prepared in the same manner from period to period. Repeat, independent tests would reach the same conclusions & results. Info that is out of date reduces relevance.
