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Definition
Financial reporting for an entity must be a reliable depiction of what it purports to represent |
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quality that enables users to identify similarities and differences between two sets of economic phenomena |
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helps assure users that information faithfully represents what it purports to depict |
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enables users to receive information in time to influence a decision |
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enables users to comprehend the meaning of the information they receive |
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requires that once a company has adopted an accounting procedure, it must use if from one period to the next |
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relative importance of an item or event |
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accountants should choose the decision that is least likely to overstate assets and income |
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the benefits to be gained from providing accounting information should be greater than the costs of providing it |
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cash and other assets that a company can expect to convert to cash, sell, or consume |
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average time a company needs to go from spending cash to receiving cash |
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assets that management does not intend to convert to cash in the next year |
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Property, Plant, and Equipment |
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tangible long-term assets |
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Definition
long-term assets like patents, copyrights, goodwill, franchises, and trademarks |
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obligations that must be satisfied within the company's normal operating cycle |
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Debts that fall beyond the operating cycle, such as mortgages payable, long-term, notes, employee pension obligations, and long-term lease liabilities |
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total cash sales and total credit sales |
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Sales Returns and Allowances |
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cash refunds, credits on accounts, and discounts |
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amount a merchandiser paid for the merchandise it sold during an accounting period |
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difference between net sales and the cost of goods sold |
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expenses incurred in running a business other than the cost of goods sold |
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difference between gross margin and operating expenses |
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Nonoperating Revenues and Expenses |
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revenues from investments and interest earned on credit or notes |
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Definition
amount a company has earned from all activities before taking into account the amount of income taxes it incurred |
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Represent the expense for federal, state, and local taxes |
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final figure of an income statement |
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net income earned on each share of common stock |
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amount by which current assets exceed current liabilities |
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ratio of current assets to current liabilities |
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percentage of each sales dollar that results in net income |
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measures how efficiently assets are used to produce sales |
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net income/ average total assets |
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shows the proportion of a company's assets that is financed by creditors and the proportion that is financed by stockholders |
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net income/average stockholders' equity |
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