Complex information that is difficult to comprehend should still be included.  In this case, there could be conflict between

Existing and potential investors, lenders, and other creditors

General purpose financial statements contain all the specific information every primary user needs.

This characteristic of information allows users to evaluate and analyze similar items about a reporting entity for different periods, or different entities for a similar period.

Providers of resources have a claim on the

Resources should be maintained at the original amounts provided.

The primary users of general purpose financial reports

Resources and claims change because of

Primary users are interested in how well the resources provided have been used by the entity.

Assume that the resources of a company amounted to $10,000 at the beginning of the year, while claims by creditors and investors were $40,000 and $60,000 respectively. At the end of the year, both resources and claims of investors increased by $20,000 each, while creditors’ claim was unchanged. What could have happened if the investors did not provide additional capital?

Change in resources because of financial performance reflects the reporting entity’s

Because data is available quickly, technology will make general purpose financial statements unnecessary.

Claims on the enterprise’s resources are said to be “continuing” because

When lender’s claims are growing faster than the claims of investors, and resources are not growing significantly, this indicates that the

This characteristic of information enables users to arrive at consensus even if information is subjected to different analysis and examination.

Claims only apply to future cash flows

Which of the following are enhancing characteristics?

This characteristic of information is capable of making a change in a decision because of the nature or magnitude of the item in relation to the entity.

Provides resources to the reporting entity with expectation of repayment at some definite future date

Information that has the characteristics of relevance and faithful representation will still be useful even if it is not understandable.

To be able to understand financial reports, users are expected to

Primary users of general purpose financial reports

Information that does not have any enhancing characteristic, but has all the fundamental characteristics is useful.

Which statement correctly describes the characteristics of useful financial information?

Primary users of general purpose financial reports

Information that is not relevant will still be useful as long as it is timely.

Information will never be useful if these characteristics are not present even if the others are.

Not a primary user of general purpose financial reports

Information that is complex may be difficult to understand. To simplify the report, this information should be excluded.

Information will still be useful if the following characteristics are missing as long as the fundamental characteristics are present.

Who among the following has direct access to internal information?

What characteristic of information is maximized if a company invests in information technology for faster processing of data, making reports available to decision makers when needed?

Relevant information is characterized further by these attributes.

Investors, lenders, and other creditors rely on general purpose financial reports because

An entity that uses its resources efficiently and effectively will most likely

This fundamental characteristic affects the degree of relevance an entity attaches to information. Some companies consider a technology or phenomenon important while others do not. A company sets a limit for amounts for certain purposes, which other companies may consider too high or too low.

Which of the following statements is a realistic expectation?

The major decision that primary users of information make involves

Which of the following are considered securities or proof of ownership or claims?

This characteristic of information is fundamental to the usefulness of information by allowing users to make decisions with future impact.

All of the following are interested in general purpose financial reports. They have different roles and reasons. Primary users are those who provide capital. Match each with what they do for, or their interest in, the enterprise.

Economic resources refer to

Which of the following statements apply to a lender or creditor?

This characteristic of information is fundamental to the usefulness of information by allowing users to validate past decisions.

Which two are fundamental characteristics?

Resources are provided by

Which of the following statements apply to an investor?

A report recommended purchase of a machine expected to increase productivity by 20% and reduce maintenance cost by 15% annually over a 10-year period. The production and cost reports showed that the machine performed as expected. What fundamental characteristic applies to the information?

Which two are enhancing characteristics?

There are many interested in general purpose financial information, but this group is considered the primary user.

An enterprise with good performance will likely

Which of the following are characteristics of faithful representation?