ACCT 209: EXAM 1
36 Cards in this Set
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Benefit and Costs
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The cost to prepare, communicate and interpret the information should not exceed the benefit to the users from having the information
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Understandibility
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Info must be unstood by users with reasonable comprehension
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Decision Usefulness
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Info should contribute benefically to the decision making process. Divided into relevance and relaiblilty
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Relevance
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Info is relevant is it makes a different in a particular decision. Must be received in a timely basis. (Katrina car that was flooded)
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Relaibility
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Info is reliable if it was reasonably free from error and bias
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Comparability
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apple to apples; allows users to compare multiple entries to examane similarities and differences easily
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consistency
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inforamtion should be consistently prepared from period to period (at least once a year) sameway every year
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entity assumption
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for acctounting purposes, each enterprise is assumed to be and treated as an entity separate and distinct from its owners
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going-concern assumption
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it is assumed taht each enterprise will continue opperating indefinitly (forever)
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stable-monetary-unit assumption
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business transactions and events are recorded in terms of money. and inflation and deflation are ignored
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time period assumption
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accounting informatino is prepared periodically to be recieved on a timely basis. like a semster gpa.
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historical cost principle
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Assets will be valued at the price paid upon acquisition OR the fair market value of the asset at the time of its acquisition or receipt.
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matching principle
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A GAAP principle that requires matching expenses incurred in an accounting period with the revenue earned in the same period.
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materiality principle
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requires accountants to use generally accepted accounting principles except when to do so would be expensive or difficult, and where it makes no real difference if the rules are ignored.
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revenue-recognition principle
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The principle prescribing that revenue is recognized when earned. did work.
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full disclosure
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Guideline that financial statements should not include just numbers but should also furnish management's interpretations and explanations of those numbers
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convervatism
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if there are two values of income and assats, the accountant shuold choose the lesser of the two
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Assets
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1-Current:
cash,marketable securities,accounts receivable,notes receivable, inventory, supplies, prepaid expenses
2- Fixed:
Land, buildings, plants and equipment, vehicles, furnature, other real property (contra liab- accomidated depreciation), land improvements
3-Other:
Patents,…
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liabilities
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1-Current:
Accounts payable,accured expenses, current portion of long term debt, notes payable (less tahn 1 year), wages payable, rent payable, taxes payable, UNEARNED REVENUE
2-Long term: <- memorize these three cuz if not it then ^
anything over a year, bonds payable, mortgages pay…
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Stock holders equity
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common stock and retained earnings
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Statement of retained earnings
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beg ret earn balance + NI - dividends = end ret earn balance
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income statement
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revenues - expenses = net income
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statement of STHE
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beginning STHE + new stock issuences + NI - dividends = end STHE
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ballance sheet
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Assasts = liabilites + STHE
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Gross Profit
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The difference between sales revenue and the cost of goods sold
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General Ledger
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the ledger that contains all of the financial accounts of a business
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General Journal
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An all-purpose journal in which all the transactions of a business may be recorded.
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Trial Balance
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a balance of debits and credits in double-entry bookkeeping
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FASB
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Financial Accounting Standards Board; a group of individuals who set rules followed in the preparation and presentation of annual reports.
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GAAP
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Generally Accepted Accounting Principles, a collection of rules and procedures and conventions that define accepted accounting practice
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IFRS
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International Financial Reporting Standards --- set by the IASB and followed in the rest of the world ("principles based").
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corporation
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a business owned by stockholders who share in its profits but are not personally responsible for its debts
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managerial accounting
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the internal use of accounting statements by managers in planning and directing the organization's activities
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financial accounting
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Accounting information and analyses prepared for people outside the organization.
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adjustments
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changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period
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accrued expenses
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Expenses incurred but not yet paid in cash or recorded
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ACCT 209: EXAM 1