chap 1 and 2 Flashcards
Obligation to transfer cash or other resources as a result of a past transaction.
Liability
Dividends paid by a corporation to its shareholders. It decreases in equity resulting from transfers to owners.
Distribution to owners
Inflow of an asset from providing a good or service.
revenue
the financial position of a company
assets, liabilities, and equity
increase in equity during a period from nonowner transactions
comprehensive income
increase in equity from peripheral or incidental transactions
gain
sale of an asset used in the operations of a business for less than the asset’s book value
loss
the owners’ residual interest in the assets of a company
equity
an item owned by the company representing probable future benefits
Assets
revenues plus gains less expenses and losses
net income
an owner’s contribution of cash to a corporation in exchange for ownership shares of stock
investment by owner
outflow of an asset related to the production of revenue.
expense
faithful representation
agreement between a measure and the phenomenon it purports to represent
consistency
applying the same accounting practices over time
materiality
concerns the relative size of an item and its effect on decisions
predictive value
information is useful in predicting the future
comparability
important for making interfirm comparisons
understandability
users understand the information in the context of the decision being made
cost effectiveness
requires consideration of the costs and value of information
neutrality
the absence of bias
recognition
the process of admitting information into financial statements
confirmatory value
information confirms expectations
relevance
pertinent to the decision at hand
timeliness
information is available prior to the decision
