Ch. 1 Flashcards
Accounting information is based on actual cost, an objectively determined number
Measurement (Cost) Principle
Events
Refer to happening that affect the accounting equation and are reliably measured
Identifies cash inflows (receipts) and cash outflows (payments) over a period of time.
Statement of cash flows
Measurement (Cost) Principle
Accounting information is based on actual cost, an objectively determined number
Owner Investments
Resources such as cash that an owner puts into the company and are included under the generic account Owner, Capital.
Return
Often linked to net income. Stated in a ratio form as income divided by assets invested.
Statement of owner’s equity
Explains changes in equity from net income (or loss) and from any owner investments and withdrawals over a period of time
Examples of Liabilities
Accounts payable, notes payable, taxes payable, wages payable, creditors’ claims on assets/amount company owes. Anytime you see the word payable, it is a liability
Full Disclosure Principle
Prescribes that a company report the details behind financial satements that would impact users’ decisions.
Shares (Stock)
Ownership of all corporations is divided into units
Assets
Resources are resources a company owns or controls. These resources are expected to yield future benefits.
Net loss
Occurs when expenses exceed revenues, which decrease equity
Internal Transactions
Exchanges within an entity, which may or may not affect the accounting equation
Going-Concern Assumption
Assumption that the business will continue operating instead of be closed or sold
Revenues
Sales of products or services to customers. Increaes equity (via net income) and result from a company’ earning activities.
FASB
Financial Accounting Standars Boards
private sector group that sets rules and principles
Explains changes in equity from net income (or loss) and from any owner investments and withdrawals over a period of time
Statement of owner’s equity
Income Statement
Describes a company’s revenues and expenses along with the reulting net income or loss over a period of tim due to earning activities.
International Financial Reporting Standards
Identify preferred accounting practices
created by IASB
Sales of products or services to customers. Increaes equity (via net income) and result from a company’ earning activities.
Revenues
Cost Benefit Constraints
Prescribes that only information with benefits of disclosure greater than the costs of providing it need be disclosed
Ownership of all corporations is divided into units
Shares (Stock)
Equity
Owner’s claim on assets, and is equal to assets minus liabilties. Also called net assets or reisdual equity.
For a noncorporate entity, owner investments and revenues increase equity whereas owner qithdrawals and expenses decrease equity.
Bonds
Written promises by organizations to repay amounts loaned with interest
The uncertainty about the return we will earn.
Risk
Refer to happening that affect the accounting equation and are reliably measured
Events
Resources are resources a company owns or controls. These resources are expected to yield future benefits.
Assets
An information and measurement system that identifies, records, and communicates relevant,r reliable, and comparable information about an organizations business activities
Accounting
Exchanges within an entity, which may or may not affect the accounting equation
Internal Transactions
The cost necessary to earn revenues. Decrease equity.
Expenses
Corporation
A business legally separate from its owners, meaning it is responsible for its own acts and debts.
Has a separate legal status which means it can conduct business with the rights, duties, and responsibilities of a person.
Only information that would influence the decisions of a reasonable person should be disclosed
Materiality Constraint
Owner’s claim on assets, and is equal to assets minus liabilties. Also called net assets or reisdual equity.
For a noncorporate entity, owner investments and revenues increase equity whereas owner qithdrawals and expenses decrease equity.
Equity
Money Unit Assumption
We can express transactions and events in monetary, or money, units
Prescribes that only information with benefits of disclosure greater than the costs of providing it need be disclosed
Cost Benefit Constraints
Provides guidance on when a company must recognize revenue. To recognize means to record it.
Revenue Recognition Principle
Accounting
An information and measurement system that identifies, records, and communicates relevant,r reliable, and comparable information about an organizations business activities
External Users
Use accounting information, but are not directly involved in running the organization.
Accounts payable, notes payable, taxes payable, wages payable, creditors’ claims on assets/amount company owes. Anytime you see the word payable, it is a liability
Examples of Liabilities
Expenses
The cost necessary to earn revenues. Decrease equity.
Cash, accounts recievable, Store Supplies, Equipment, Vehicles
Examples of Assets
IASB
An independent group (consisting of individuals from many countries), issues International Financial Reporting Standards that identify preferred accounting practices
International Accounting Standards Board
We can express transactions and events in monetary, or money, units
Money Unit Assumption
When a corporation issues only one class of stock.
Common (Capital) Stock
