Conceptual Framework Flashcards
Fundamental characteristics of accounting
Faithful representation / relevance
Qualitative characteristics of faithful representation
Complete, Neutral, Free of Error
Qualitative characteristics of Relevance
Predictive Value, Materiality, Confirmatory value
Enhancing characteristics
Verifiability, Comparability, Understandability, Timeliness
4 GAAP Assumptions
Economic Entity, Going Concern, Periodcity, Monetary Unit
4 GAAP Principles
Revenue recognition, expense recognition, measurement, full disclosure
Deferred revenue is basically ; how is it accounted for
Unearned revenue ; as a liability until service has been performed
Accrued revenue is when
Services have been performed but not yet billed
Elements of the income statement
Revenues, expenses, gains, losses
Elements of the balance sheet
Asset, liability, equity, comprehensive income (apart of equity)
Investment and distribution by owners belongs to what statement
Retained earnings or stockholders equity
Revenue recognition recognizes revenues when
Earnings process is complete and the collectibility is reasonably assured
Expense recognition
Record all expense that generated revenue in period
Measurement principles 6 categories
Historical cost, net realizable value, replacement cost, current cost, present value, fair value
Economic Entity is a GAAP _________ , definition
Assumption, Activities by owner of business are kept separately from business itself ( Owner and Business are accounted for separately )
