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13 Cards in this Set
- Front
- Back
- 3rd side (hint)
What are the Qualitative Characteristics of Accounting?
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1.Understandability
2. Usefulness. What are the characteristics of Usefulness? |
Relevant & Reliable
Relevance indicates that information has a Predictive value, feedback value, Timeliness. Reliability indicates the information is Neutral, Verifiable, and contains representational faithfulness. |
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What are the Objectives of Financial Reporting?
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1. Provide Information useful for investment and credit decisions
2. Provide information useful for assessing cash flow prospects (Amount, timing, uncertainties) 3. Provide Information about the enterprise's resources, claims to those resources, and changes therein |
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What are the most authoritative sources of guidance in the Heirarchy of GAAP?
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Statements of Financial Accounting Standards and Interpretations, APB Opinions, and Accounting Research Bulletins
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What are the pervasive constraints to Financial Reporting?
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Benefits outweigh the associate costs
Materiality |
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Revenue Recognition criteria
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Revenue must be recognized when both earned (indicates the transfer of risk and that substantially all work has been completed) and realized or realizable.
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What is the matching principle?
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Expenses should be recorded in the same period as their related revenues
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How is full disclosure achieved in financial reporting?
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Through the notes to the financial statements which contain additional information considered important for achieving the objectives of financial reporting.
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What is the principle of conservatism?
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Conservatism governs that gains should be deferred until they are both earned and realized or realizable, not solely when cash has been received. However, probably losses should be recorded immediately as long as it is reasonably estimable.
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Comprehensive income
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All income to the entity excluding exchanges with owners.
Net Income +/- Pension changes in the funded status Unrealized gains and losses on AFS securities Foreign currency translation adjustments Effective portion of cash flow hedges |
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Changes in which balance sheet accounts result in revenues? expenses?
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Revenues result from an increase in assets or a decrease in liabilities
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Expenses result from an increase in liabilities or a decrease in assets
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What is the essential quality of an asset?
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An asset signifies that the item will provide future benefits and therefore to comply with the matching principle it must amortize these costs of future periods benefits.
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Gross Concept
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Amounts are recorded in their entirety. This applies to expenses and revenues which are recorded in whole and then netted together in order to find income from continuing operations.
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Single Step Income Statement
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Total Expenses are subtracted from
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