Term
| Four financial statements |
|
Definition
Balance Sheet
Cash Flow Statement
Income Statement
Statement of Equity |
|
|
Term
| What kind of setting are the four statements? |
|
Definition
|
|
Term
|
Definition
| SEC, CAP, APB, FASB, AICPA, PPE |
|
|
Term
| SEC (Security and Exchange Commision) |
|
Definition
accounting and reporting for public companies, encourged private companies to adhere to GAAP,
Enforcement authority. && CAP, APB, and FASB are all branched from SEC |
|
|
Term
| CAP (Committee of Accounting Principles ) |
|
Definition
| 1939-1959, issued 51 ARBs (Accounting Research Bulletins, problem-by-problem approach failed. |
|
|
Term
| APB (Accounting Principles Board ) |
|
Definition
| 1959-1973, issued 31 APBOs (accounting principle board opinions), Wheat committee recommedations adopted in 1973. |
|
|
Term
| FASB (Financial Accounting Standards Board) |
|
Definition
| Mission to establish and improve standards of financial accounting and reporting. (current accounting) |
|
|
Term
|
Definition
| FASB: Smaller membership, full-time, remunerated memebership, freater authority, increased independence, broader representation. |
|
|
Term
| AICPA (American Institute of Certified Public Accountants) |
|
Definition
| National professional organization, established CAP && APB (current accounting) |
|
|
Term
| Essential characterisitcs of accounting |
|
Definition
1. ID, measurement, and communication of financial info about
2. economics entities to
3. interested parties |
|
|
Term
|
Definition
| provide financial info about the reporting entitiy that is useful to present and potential equity investors, lenders, and other creditors. |
|
|
Term
| GAAP (General Accepted Accounting Principles) |
|
Definition
| the accounting profession as attempted to develop a set of standards that are generally accepted and universally practiced. |
|
|
Term
| substancial authortative support (major sources of GAAP) |
|
Definition
FASB standards, interpretations, and staff positions
APB opinions
AICPA accounting research bulletins |
|
|
Term
| IAS (International Accounting Standards) |
|
Definition
| two sets of standards accepted: US GAAP by FSAB && IFRS (International Financial Reporting Standards) |
|
|
Term
|
Definition
| Three levels, 1st, 2nd, 3rd |
|
|
Term
| Need for Conceptual Framework |
|
Definition
| to develop a coherent set of standards and rules && to solve new and emerginig practical problems. |
|
|
Term
| Statements of Financial Accounting Concepts (SFAC) |
|
Definition
|
|
Term
|
Definition
| objective of financial reporting |
|
|
Term
|
Definition
| Qualitative Characteristics of Accounting info |
|
|
Term
|
Definition
| elements of financial statements |
|
|
Term
|
Definition
| recognition and mesurement in financial statemtns |
|
|
Term
|
Definition
| elements of financial statements (replaces SFAC no. 3) |
|
|
Term
|
Definition
| using cash flow infoan present value in accounting measurements |
|
|
Term
|
Definition
| the objective of general purpose financial reporting and qualitative characterisics of useful financial information (replaces SFAC no. 1 && 2) |
|
|
Term
| First level of Conceptual Framework |
|
Definition
| Basic Objectives (SFAC no. 1) |
|
|
Term
| Second level of Conceptual Framework |
|
Definition
| Qualitative Characteristics and Elements (SFAC nos. 2 && 3) |
|
|
Term
| Third level of Conceptual Framework |
|
Definition
| Recognition, Measurement, and Disclosure concepts (SFAC no. 5-8) |
|
|
Term
|
Definition
| level one: to provide financial info bout the reporting entitiy that is useful to present and potential equity investor, lenders, and other creditiors in making decisions about providing resources to the entity. |
|
|
Term
|
Definition
| level two: qualitative characteristics "the FASB id the Qualitative Characteristics of accounting info that distinguish better info from inferior info from decision-making purposes." |
|
|
Term
| Qualitative Characteristics |
|
Definition
| Fundemental qualities, enhancing qualitites |
|
|
Term
|
Definition
| Relevance && Faithful representation |
|
|
Term
|
Definition
| predictive value, confirmatory value, && materiality |
|
|
Term
|
Definition
| completeness, neutality, free from error |
|
|
Term
|
Definition
| it has a value as an imput to predictive processes used by investors to form their own expectations about the future |
|
|
Term
|
Definition
| relevant info also helps users confirm or correct prior expectations |
|
|
Term
|
Definition
| if omitting it or misstating it could influence decisions that users make on the basis of the reported financial info |
|
|
Term
|
Definition
| that all the info that is necessary for faithful rep. is provided |
|
|
Term
|
Definition
| that a company cannot select info to favor one set of interested parties over another |
|
|
Term
|
Definition
| be more accurate rep of financial item, no material error |
|
|
Term
|
Definition
| comparabitily, verifiability, timeliness, understandabilty |
|
|
Term
|
Definition
| info that is measured and reporting in a similar manner for different companies |
|
|
Term
|
Definition
| when independent measures, using the same methods, obtain similiar results |
|
|
Term
|
Definition
| having info avaliable to decision-makers before it looses its capacity to influence decisions |
|
|
Term
|
Definition
| the quality of info that lets reasonably informed usuers see it significance |
|
|
Term
| second level: basic elements |
|
Definition
| "moment in time" and "period of time" |
|
|
Term
| "moment in time" : balance sheet |
|
Definition
| assets, liabilities, equity |
|
|
Term
| "period of time" (fiscal year): income statement and state of equity |
|
Definition
| revenue && expeneses (gains && losses); investment by owners, distribution to owners, comprehensive income |
|
|
Term
| Third Level: Basic Assumptions |
|
Definition
| economic entity, going concern, monetary unit, periodcity |
|
|
Term
|
Definition
| company keeps its activities separate from its owners and other businesses |
|
|
Term
|
Definition
| company last long enough to fulfill objectives and commitments |
|
|
Term
|
Definition
| money is the common denomenator |
|
|
Term
|
Definition
| company can divide its economic activites into time periods |
|
|
Term
|
Definition
| measurement, revenue recognition, expense recognition, full disclosure |
|
|
Term
|
Definition
| most commonly used measurements are based on historcial cost and fair value. |
|
|
Term
|
Definition
| generall occurs when realized or when earned |
|
|
Term
|
Definition
| "let the expense follow the revenue" |
|
|
Term
|
Definition
| providing info that is of sufficent importance to influence the judgement and decisions of an informed user |
|
|
Term
|
Definition
| Cost and Industry practice |
|
|
Term
|
Definition
| cost of providing info must be weighed against the benefits that can be derived from using it |
|
|
Term
|
Definition
| the peticuliar nature of some industries and business concerns sometimes requires departure from basic accouting theory. |
|
|
Term
| AIS (Accountin Info System) |
|
Definition
| collects and processes transaction data && disseminates the info to interested parties. |
|
|
Term
|
Definition
|
|
Term
|
Definition
| company is doing external & internal buying and selling |
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
| one entry for each transaction |
|
|
Term
|
Definition
|
|
Term
|
Definition
| post transactions to each ledger |
|
|
Term
|
Definition
| adding all the debits and credits |
|
|
Term
|
Definition
| the entries that have changed in the certain time span |
|
|
Term
|
Definition
| all the statments that we work with balance sheet, income statment, cash flow, && statement of equity |
|
|
Term
|
Definition
| assets and expenses are debited |
|
|
Term
|
Definition
| liabilities, equity and revenue are credited |
|
|
