Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

15. GAAP vs IFRS

GAAP vs. IFRS: Introduction

Financial Accounting

15. GAAP vs IFRS

GAAP vs. IFRS: Introduction

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Multiple Choice

Which of the following is a primary qualitative characteristic that Generally Accepted Accounting Principles (GAAP) require financial information to possess?

Relevance

Historical cost only

Legal enforceability

Tax neutrality

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Verified step by step guidance

Understand the concept of qualitative characteristics in financial accounting. These are attributes that make financial information useful to users, as outlined by GAAP.

Identify the primary qualitative characteristics defined by GAAP. These include relevance and faithful representation, which ensure that financial information is meaningful and reliable.

Analyze the term 'relevance.' Relevance means that financial information should be capable of influencing decisions made by users. It must have predictive value, confirmatory value, or both.

Evaluate the other options provided in the question: 'Historical cost only,' 'Legal enforceability,' and 'Tax neutrality.' These are not primary qualitative characteristics under GAAP. Historical cost is a measurement basis, legal enforceability pertains to contracts, and tax neutrality is related to taxation policy rather than financial reporting.

Conclude that the correct answer is 'Relevance,' as it is a primary qualitative characteristic required by GAAP to ensure financial information is useful for decision-making.