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Intermediate Acct 1 > Ch 1 The Environment and Conceptual Framework of Financial Reporting > Flashcards

Ch 1 The Environment and Conceptual Framework of Financial Reporting Flashcards

1
Q

decision-usefulness

A

provide useful information for decision-making

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2
Q

financial statements

A

balance sheet, income statement, statement of cash flows, statement of stockholders’ equity

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3
Q

financial reporting

A

the financial information a company provides to help users with capital allocation decisions about the company

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4
Q

GAAP

A

common set of standards and procedures

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5
Q

Securities and Exchange Commission

A

SEC, a federal agency to help develop and standardize financial information presented to stockholders

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6
Q

Financial Accounting Standards Board

A

FASB, the major standard-setting organization in the private sector

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7
Q

FAF

A

Financial Accounting Foundation (FAF)

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8
Q

Financial Accounting Standards Advisory Council

A

FASAC, consults with FASB on major policy and technical issues and helps select task force members

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9
Q

financial accounting standards

A

accounting standards updates

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10
Q

American Institute of the Certified Public Accountants

A

AICPA, the national organization of practicing certified public accountants

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11
Q

conceptual framekwork

A

establishes the concepts that underlie financial reporting

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12
Q

objective of financial reporting

A

serves as the foundation of the conceptual framework

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13
Q

general-purpose financial statements

A

help users who lack the ability to demand all the financial information they need from a company and therefore must rely on the information provided in financial statements

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14
Q

qualitative characteristics

A

helps distinguish better (more useful) information from inferior (less useful) information for meeting the objective of financial reporting

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15
Q

predictive value

A

accounting information that helps users form their own expectations about the future

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16
Q

confirmatory value

A

accounting information that helps users confirm or correct prior expectations

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17
Q

materiality

A

a company-specific aspect of relevance; information is material if omitting it or misstating it would influence decisions that users make on the basis of the reported financial information

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18
Q

faithful representation

A

the numbers and descriptions match what really existed or happened

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19
Q

completeness

A

all the information that is necessary for faithful representation is provided

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20
Q

neutrality

A

a company cannot select information to favor one set of interested parties over another

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21
Q

free from error

A

information that is more accurate because there are no errors

22
Q

comparability

A

enables users to identify the real similarities and differences in economic events between companies

23
Q

consistency

A

when a company applies the same accounting treatment to similar events, from period to period

24
Q

verifiability

A

when independent measurers, using the same methods, obtain similar results

25
Q

timeliness

A

having information available to decision-makers before it loses its capacity to influence decisions

26
Q

understandability

A

the quality of information that lets reasonably informed users see its significance

27
Q

assets

A

probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events

28
Q

liabilities

A

probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events

29
Q

equity

A

residual interest in the assets of an entity that remains after deducting its liabilities; in a business enterprise, the equity is the ownership interest

30
Q

investments by owners

A

increases in net assets (equity) of a particular enterprise resulting from transfers to it from other entities of something of value to obtain or increase ownership interests (or equity) in it; assets are most commonly received as investments by owners, but that which is received may also include services or satisfaction or conversion of liabilities of the enterprise

31
Q

distributions to owners

A

decreases in net assets (equity) of a particular enterprise resulting from transferring assets, rendering services, or incurring liabilities by the enterprise to owners; distributions to owners decrease ownership interests (or equity) in an enterprise

32
Q

comprehensive income

A

change in net assets( equity) of an entity during a period from transactions and other events and circumstances from nonowner sources; it includes all changes in equity during a period except those resulting from investments by owners and distributions to owners

33
Q

revenues

A

inflows or other enhancements of assets of an entity or settlement of its liabilities (or a combination of both) during a period from delivering or producing goods, rendering services, or other activities that constitute the entity’s ongoing major or central operations

34
Q

expenses

A

outflows or other using up of assets or incurrences of liabilities (or a combination of both) during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity’s ongoing major or central operations

35
Q

gains

A

increases in net assets (equity) from peripheral or incidental transactions of an entity and from all other transactions and other events and circumstances affecting the entity during a period except those that result from revenues or investments by ownerso

36
Q

losses

A

decreases in net assets (equity) from peripheral or incidental transactions of an entity and from all other transactions and other events and circumstances affecting the entity during a period except hose that result from expenses or distributions to owners

37
Q

economic entity assumption

A

economic activity can be identified with a particular unit accountability

38
Q

going concern assumption

A

the company will have a long life

39
Q

monetary unit assumption

A

money is the common denominator of economic activity and provides an appropriate basis for accounting measurement and analysis

40
Q

periodicity assumption

A

a company can divide its economic activities into artificial time periods

41
Q

historical cost principle

A

GAAP requires that companies account for and report many assets and liabilities on the basis of acquisition price

42
Q

fair value principle

A

the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date

43
Q

performance obligation

A

when a company agrees to perform a service or sell a product to a customer

44
Q

revenue recognition principle

A

requires that companies recognize revenue in the accounting period in which the performance obligation is satisfied

45
Q

expense recognition principle

A

related to net changes in assets and earning revenues

46
Q

product costs

A

material, labor, and overhead

47
Q

period costs

A

salaries and other administrative expenses

48
Q

full disclosure principle

A

the nature and amount of information included in financial reports reflects a series of judgmental trade-offs

49
Q

notes to financial statements

A

amplify or explain the items presented in the main body of the statements

50
Q

supplementary information

A

includes details or amounts that present a different perspective from that adopted in the financial statements

51
Q

cost constraint

A

weighing the costs of providing the information against the benefits that can be derived from using it

52
Q

expectation gap

A

what the public thinks accountants should do vs what accountants think they can do

Intermediate Acct 1 (18 decks)

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