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Accounting 207 > Chapter 2 > Flashcards

Chapter 2 Flashcards

1
Q

classified balance sheet

A

a balance sheet that groups together similar assets and similar liabilities using a number of standard classifications and sections

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2
Q

Comparability

A

ability to compare the accounting information of different companies because they use they use the same accounting principles

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3
Q

Consistency

A

use of the same accounting principles and methods from year to year within a company

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4
Q

Cost Constraint

A

constraint that weighs the cost that companies will incur to provide the information against the benefit that financial statement users will gain from having the financial information available

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5
Q

Current Assets

A

Assets that companies expect to convert to cash or use up within one year or the operating cycle, whichever is longer

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6
Q

Current Liabilities

A

Obligations that a company expects to pay within the next year or operating cycle, whichever is longer

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7
Q

Current ratio

A

A measure of liquidity computed as current assets divided by current liabilities

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8
Q

Debt to Assets Ratio

A

A measure of solvency calculated as total liabilities divided by total assets. It measures the percentage of total financing provided by creditors

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9
Q

Earnings per share(EPS)

A

a measure of the net income earned on each share of common stock; computed as net income minus preferred dividends divided by the average number of common shares outstanding during the year

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10
Q

Economic entity assumption

A

An assumption that every economic entity can be separately identified and accounted for

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11
Q

Fair value principle

A

Assets and liabilities should be reported at fair value ( the price received to sell an asset or settle a liability)

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12
Q

Faithful representation

A

Information that is complete, neutral, and free from error

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13
Q

Financial Accounting Standards Board(FASB)

A

The primary accounting standard-setting body in the United States

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14
Q

Free Cash Flow

A

Net cash provided by operating activities after adjusting for capital expenditures and cash dividends paid

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15
Q

Full disclosure principle

A

Accounting principle that dictates that companies disclose circumstances and events that make a difference to financial statement users

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16
Q

Generally Accepted Accounting Principles(GAAP)

A

A set of accounting standards that have substantial authoritative support, that guide accounting professionals

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17
Q

Going concern assumption

A

The assumption that the company will continue in operation for the foreseeable future

18
Q

Historical Cost Principle

A

An accounting principle that states that companies should record assets at their costs

19
Q

Intangible Assets

A

Assets that do not have physical substance

20
Q

International Accounting Standards Board(IASB)

A

An accounting standard-setting body that issues standards adopted by many countries outside of the United States

21
Q

International Financial Reporting Standards(IFRS)

A

Accounting standards that have been issued by the IASB, that have been adopted by many countries around the world

22
Q

Liquidity

A

The ability of a company to pay obligations that are expected to become due within the next year or operating cycle

23
Q

Liquidity ratios

A

measures of the short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash

24
Q

Long Term Investments

A
  • investment in stocks and bonds of other corporations that hold for more than 1 year
  • long -term assets such as land
  • long-term notes receivable
25
Q

Long-term liabilities

A

Obligations that a company expects to pay after one year

26
Q

Materiality

A

Whether an item is large enough too influence the decision of an investor or creditor

27
Q

Monetary Unit Assumption

A

An assumption that requires that only those things that can be expressed in money are included in the accounting records

28
Q

Operating cycle

A

the average time required to purchase inventory,sell it on account, and then collect cash from customers that is go from cash to cash

29
Q

Periodicity Assumption

A

An assumption that the life of a business can be divided into artificial time periods and that useful reports covering those periods can be prepared for the business

30
Q

Profitability Ratios

A

Measures of the operating success of a company for a given period of time

31
Q

Property,plant, and equipment

A

assets with relatively long useful lives that are currently used in operating the business

32
Q

Public Company Accounting Oversight Board(PCAOB)

A

the group charged with determining auditing standards and reviewing the performance of auditing firms

33
Q

Relevance

A

The quality of information that indicates the information makes a difference in a decision

34
Q

Securities and Exchange Commission(SEC)

A

The agency of the U.S. government that oversees U.S. financial markets and accounting standard setting bodies

35
Q

Solvency

A

the ability of a company to pay interest as it comes due and to repay the balance of debt due at its maturity

36
Q

Solvency ratios

A

Measures of the ability of the company to survive over a long period of time

37
Q

Statement of Stockholder’s Equity

A

A financial statement that presents the causes of changes to stockholder’ equity during the period , including those that caused retained earnings to change

38
Q

Timely

A

Information that is available to decisions makers before it loses its capacity to influence decisions

39
Q

Understandability

A

information presented in a clear and concise fashion so that users can interpret it and comprehend its meaning

40
Q

Verifiable

A

the quality of information that occurs when independent observers using the same methods obtain the same results

41
Q

Working capital

A

The difference between the amount of current assets and current liabilities

Accounting 207 (24 decks)

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