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9 Cards in this Set
- Front
- Back
What are the accounting concepts and principles that govern accounting?
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GAAP (Generally Accepted Accounting Principles).
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What is the primary objective of financial reporting?
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To provide information useful for making investment and lending decisions.
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What are the 3 characteristics of useful investment and lending information?
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1.) relevant.
2.) reliable. 3.) comparable. |
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Name 5 fundamental accounting concepts/principles.
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1.) entity concept.
2.) reliability (objectivity) principle. 3.) cost principle. 4.) going-concern concept. 5.) stable-monetary-unit concept. |
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This concept states that each entity is an economic unit and is kept separate from other entities so as not to confuse the affairs of various entities.
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The entity concept.
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This principle states that accounting records should be based on the most verifiable data. The historical cost of an item is considered reliable.
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The reliability (objectivity) principle.
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This principle states that assets and services should be recorded at actual (historical) cost.
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The cost principle.
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This concept assumes that the entity will remain in operation for the foreseeable future. The market value of a business’s assets is only relevant if that business is going out of business.
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The going-concern concept.
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1.This concept allows accountants to add and subtract dollar amounts as though each dollar has the same purchasing power as any other dollar at any other time.
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The stable-monetary-unit concept.
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