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ACCT 209: EXAM 1
Benefit and Costs |
The cost to prepare, communicate and interpret the information should not exceed the benefit to the users from having the information |
Understandibility |
Info must be unstood by users with reasonable comprehension |
Decision Usefulness |
Info should contribute benefically to the decision making process. Divided into relevance and relaiblilty
|
Relevance |
Info is relevant is it makes a different in a particular decision. Must be received in a timely basis. (Katrina car that was flooded) |
Relaibility |
Info is reliable if it was reasonably free from error and bias
|
Comparability |
apple to apples; allows users to compare multiple entries to examane similarities and differences easily |
consistency |
inforamtion should be consistently prepared from period to period (at least once a year) sameway every year |
entity assumption |
for acctounting purposes, each enterprise is assumed to be and treated as an entity separate and distinct from its owners |
going-concern assumption |
it is assumed taht each enterprise will continue opperating indefinitly (forever) |
stable-monetary-unit assumption |
business transactions and events are recorded in terms of money. and inflation and deflation are ignored
|
time period assumption |
accounting informatino is prepared periodically to be recieved on a timely basis. like a semster gpa. |
historical cost principle |
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. |
matching principle |
A GAAP principle that requires matching expenses incurred in an accounting period with the revenue earned in the same period. |
materiality principle |
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. |
revenue-recognition principle |
The principle prescribing that revenue is recognized when earned. did work. |
full disclosure |
Guideline that financial statements should not include just numbers but should also furnish management's interpretations and explanations of those numbers |
convervatism |
if there are two values of income and assats, the accountant shuold choose the lesser of the two |
Assets |
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, copyrights, goodwill, start-up costs, organization costs, trademarks |
liabilities |
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 payable, notes payable |
Stock holders equity |
common stock and retained earnings
|
Statement of retained earnings |
beg ret earn balance + NI - dividends = end ret earn balance |
income statement |
revenues - expenses = net income |
statement of STHE |
beginning STHE + new stock issuences + NI - dividends = end STHE |
ballance sheet |
Assasts = liabilites + STHE |
Gross Profit |
The difference between sales revenue and the cost of goods sold |
General Ledger |
the ledger that contains all of the financial accounts of a business |
General Journal |
An all-purpose journal in which all the transactions of a business may be recorded. |
Trial Balance |
a balance of debits and credits in double-entry bookkeeping |
FASB |
Financial Accounting Standards Board; a group of individuals who set rules followed in the preparation and presentation of annual reports. |
GAAP |
Generally Accepted Accounting Principles, a collection of rules and procedures and conventions that define accepted accounting practice |
IFRS |
International Financial Reporting Standards --- set by the IASB and followed in the rest of the world ("principles based"). |
corporation |
a business owned by stockholders who share in its profits but are not personally responsible for its debts |
managerial accounting |
the internal use of accounting statements by managers in planning and directing the organization's activities |
financial accounting |
Accounting information and analyses prepared for people outside the organization. |
adjustments |
changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period |
accrued expenses |
Expenses incurred but not yet paid in cash or recorded |