Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Intermediate Accounting > Chapter 1 Part B > Flashcards

Chapter 1 Part B Flashcards

1
Q

Economic entity assumption

A

All economic events can be identified with a particular entity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Going concern assumption

A

Unless told otherwise a business entity will continue to operate indefinitely

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Periodicity assumption

A

Related to qualitative characteristic of timeliness. External users need periodic info to make decisions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Monetary unit assumption

A

Nominal units of money with no adjustments for change in purchasing power

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

4 criteria for recognition

A 
DMRR
Definition 
Measurability 
Relevance
Reliability
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

The 4 underlying Assumptions

A

Economic entity, periodicity, going concern, monetary unit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Definition in recognition

A

Item meets Definition of an element of financial statements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Measurability

A

Item has relevant attribute that is measurable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Relevance

A

Information is capable of making a difference in decision making

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Reliability

A

Faithfully represented verifiable and neutral

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Revenues

A

Inflow of assets or settlement of liabilities resulting for Providing a product or service to a customer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

ASU 2014-09

A

Describes how we determine timing and measurement of revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

When do we recognize revenue ?

A

When goods or services are transferred to customers for the amount the company expects to be entitled to receive in exchange for those goods or services.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Credit to revenue account

A

Corresponding debit typically increases asset usually cash or A/R

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Expenses

A

Outflows or other using up of assets or I currencies of liabilities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Expense recognition uses what four approaches

A
  1. Cause effect relationship
  2. Associating an expense with revenues recognized in a specific time period.
  3. systematic and rational allocation to specific time periods.
  4. In period incurred without regard to relevant revenues.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Cause effect relationship

A

This Is good to use for COGS.

Example : pet smart revenue from selling dog food and its cost to purchase that dog food from suppliers.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Associating expense with revenues recognized in a specific time period.

A

Monthly salary of an office worker is indirectly related to revenue recognized due to benefits employee provides to the company.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Systematic and rational allocation to specific time periods

A

Example depreciation way to allocate cost of equipment to the periods in which that equipment is used to produce revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Recognizing expenses in period incurred

A

Happens when costs are incurred but it is impossible to determine in which period or periods if any related revenues will occur

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

RMD

A

Recognition measurement disclosure

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Recognition

A

Refers to the process of admitting info into financial statements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Measurement

A

Process of associating numerical amounts with the elements

24
Q

Disclosure

A

Including additional info in the financial statements

25
Q

Five measurement attributes employed in GAAP

A 
Historical cost 
Net realizable value
Current cost
Present value
Fair value (market value)
26
Q

Historical cost

A

Aka book value or original transaction value. For liabilities it is current cash equivalent received in exchange for assuming the liability

27
Q

Net realizable value

A

Amount of cash into which an asset is expected to be converted in the ordinary course of business

28
Q

Current cost

A

Cost that would be incurred to purchase or reproduce the asset

29
Q

Present value

A

Discounting from future cash flows to approximate fair value

30
Q

Fair value

A

Market value. Price that would be received to sell assets or paid to transfer a liability in an orderly transaction between mArket participants at a set date.

31
Q

3 valuation techniques to measure fair value

A

MArket approach
Income approach
Cost approach

32
Q

Market approach

A

Base value on market info

33
Q

Income approach

A

Calculate FV and discount it to PV

34
Q

Cost approach

A

Estimation of amount by seeing what would be required to buy or construct an asset of similar quality and condition

35
Q

Level 1 fair value hierarchy

A

Most desirable and is quoted market prices in active markets for identical assets or liabilities

36
Q

Level 2 FVH

A

Inputs other than quoted prices that are observable for the asset or liability.

37
Q

Level 3 FVH

A

Unobservable inputs that reflect entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability ( least desired)

38
Q

Full disclosure principle

A

Financial reports should include any info that could affect decisions made by external users

39
Q

Parenthetical comments

A

Modifying comments placed on the face of financial statements

40
Q

Disclosure notes

A

Additional insights about company’s operations Accounting principles contractual agreements and pending litigation

41
Q

Supplemental schedules and tables

A

Report more detailed info and is shown in

Primary financial statements

42
Q

VTUCC enhancing qualitative characteristics

A 
Verifiability
Timeliness
Understandability
Comparability 
Consistency
43
Q

Fundamental qualitative characteristics 2 categories

A

Must be relevant and have faithful representation

44
Q

Relevance fundamental characteristic

A

PV, CV, materiality

45
Q

Faithful representation

A

CNF
Complete
Neutral
Free from error

46
Q

Cost effectiveness.

A

Key constraint to the accounting choices we make. Benefits must exceed costs of endowing financial info.

47
Q

Elements of financial statement

A

Assets
Liabilities
Equity

Investments by owners
Distribution to owners
Comprehensive income

Revenues

Expenses

Gains
Losses

48
Q

Assets

A

Probable future economic benefits obtained or controlled by a particular entity.

49
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.

50
Q

Equity

A

Residual interest in the assets of an entity that remains after deducting its liabilities

51
Q

Investments by owners

A

Increases in equity resulting form transfer to it from or entities of something of value to obtain or increase ownership interest in it.

52
Q

Distribution to owners

A

Decreases in equity resulting form transfer to owners

53
Q

Comprehensive income

A

Change in equity during a period from transactions and other events and circumstances from no owner sources. All changes to equity during a period except those resulting from IBO and DBO

54
Q

Revenues

A

Inflows or other enhancement of assets or settlement of liabilities

55
Q

Expenses

A

Outflows or other using up of assets or I currencies of liabilities during a period from delivering or producing he goods rendering services or other activities that constitute the entity’s ongoing major or central operations.

56
Q

Gains

A

Increases in equity from peripheral or incidental transactions of an entity

57
Q

Losses

A

Represent decreases in equity arising from peripheral or incidental transactions of an entity

Intermediate Accounting (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions