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3 Cards in this Set
- Front
- Back
- 3rd side (hint)
Objective of Financial Reporting |
Provide financial information to primary users; useful information; relevant. Faithfull representation: complete; neutral, free from error. Qualitative characteristics: comparability, verifiability, timeliness, understandability. |
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Recognition & Measurement of FS |
Is the process of classifying balance sheet: financial risk; Income statement: performance, operating risks; Comprehensive income: PUFF. Recognition criteria: definition, measurability, relevance, reliability. Measurement: Historical cost: PP&E; current cost: inventory; Net realizable value: AR & current market value; present value of future cash flow. |
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Accrual Accounting |
Revenue is recognized when the performance obligation is satisfied and expenses are recognized in the same period as related revenue, not necessarily in the period in which the cash is received or expended by the company. |
US GAAP require accrual basis system of accounting |