Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
35 Cards in this Set
- Front
- Back
Six Statments of Financial Accounting Concepts
|
"Objectives of Financial Reporting by Business Enterprises" presents the goals and purposes of accounting
"Qualitative Charachteristics of Accounting Information" examines the charchteristics that make accounting information useful. "Elements of Financial Statments of Business Enterprises" provides definitions of items in financial statments, such as assets, liabilities, revenues and expenses. "Recognition and Measurement in Financial Statments of Business Enterprises" sets forth fundamental recognition and measurement criteria and guidance on what information should be formally incorporated into financial statements "Elements of Financial Statments" Releaces SFAC no 3 and includes not-for-profit organizations "Using Cash Flow Information and Present Value in Accounting Measurents" provides a framework for using expected future cash flows and present values as a basis for measurement |
|
Basic Objectives begin with
|
broad concern about information that is useful to investor and creditor decisions
|
|
The Basic objectives narrow to
|
the investor's and creditors interest in the prospect of recieving cash from their investments
|
|
The Basic objectives focus on
|
financial statments that provide information useful in the assesment of porspetive cash flows to the business enterprise
|
|
Qualitative charachteristics of accounting
|
distinguish better information from less useful information for decision making purposes
|
|
Two primary qualities that make accounting information useful for decision making
|
reliablity and revelance
|
|
revelance
|
must be capable of making a difference in a decision, helps users make predictions about the ultimate outcome of events,
must be presented in a timely manner |
|
reliability
|
faithful representation
verifiable reasonably free of error and bias |
|
Two secondary qualities
|
Comparability and Consistency
|
|
Comparability
|
infromation that has been measured and reported in a simliar manner for different enterprises is considered comparable
|
|
Consistency
|
applies the same accounting treatment to similar events
|
|
Pro Forma measures are
|
standard measures that are ajusted for one-time nonrecurring items
|
|
Assets
|
probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events
|
|
Liabilities
|
Probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets of provide services to other entities in th efuture as a result of past transactions or events
|
|
Equity
|
Residual interest in the assets of an entity that remains after deducting its liabilities. In a business enterprise the equity is ownership interst.
|
|
Investments by Owners
|
Increases in net assets of a particular enterprise resulting from transfers to it from other entities
|
|
Distributions to Owners
|
Decreases in net assets of a particular enterprise resulting from transferring assets rendering servies or incurring liablities
|
|
Comprehensive income
|
Change in equity of an entity during a period from a transactions and other events from nonowner sources
|
|
Revenues
|
Inflows or other enchancements of assets of an entity or settlement of its liabilities from delivering goods,services, or other activities
|
|
Expenses
|
Outflows or tother using up of assets or incurrences of liabilities
|
|
gains
|
increases in equity from peripheral or incendental transactions of an entiy excepth those tha tresult from revenues or investments by owners
|
|
losses
|
decreases in equity from peripheral or incidentaltransactions of and entity and from all other transactiona and other events except those that result from expenses or distributions to owners
|
|
The first group of three elements that describes amounts of resources and claims to resources at a moment in time, these elemets are
|
assets, liabilities, and equity
|
|
The elements that describe transactions, events, and circumstances that affect an enterprise during a period of time
|
comprehensive income and its components, revenues, expenses, gains, losses, investments to and distributions by owners.
|
|
the interaction of moment of time elements that is changed by period of time elements is called
|
articulation
|
|
Four basic assumptions underlie the financial accouting structure
|
economic entity
going concern monetary unit peroidicy |
|
economic entity assumption assumes that
|
economic activity can be identified with a particular unit of accountability
|
|
going concern assumption assumes that
|
the business will have a long life
|
|
monetary unit assumption assumes that
|
the monetary unit is relevant, simple, universally available, undestandable and useful
|
|
peroidicity assumption assumes that
|
the economic activities of an enterprise can be divided into artificial time periods
|
|
There is a tradeoff between ___ and ___ in preparing financial data
|
relevance; reliability
|
|
The four basic principles of accounting are used to record transactions
|
1) historical cost
2) revenue recogntion 3) matching 4) full disclosure |
|
historical cost principle
|
requires that most assets and liablities be accounted for and rported on the basis of aquisition price
|
|
_____________ continues to be the primary basis for valuation, recording and reporting of _______________ is increasing
|
historical cost; fair value information
|
|
Revenue is generally recognized when
|
1)realized or realizable
2)when earned |