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| Acc. Info based only on actual costs; only measured by cash values |
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| Data Supported only by evidence not by someone's opinion |
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| Statements reflect the assumption that the business will continue operating |
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| Business Entity Principle |
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| Business is accounted for separately from other business entities, including its owner(s) |
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Analysis and report or an organizations accounting system, records and reports using various tests.
(Adds credibility to org's financial statements. |
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Analysis and report or an organizations accounting system, records and reports using various tests.
(Adds credibility to org's financial statements. |
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Definition
Analysis and report or an organizations accounting system, records and reports using various tests.
(Adds credibility to org's financial statements. |
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| Area that includes planning future transactions to minimize taxes paid. |
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Securities and Exchange Commission: Gov. group that establishes securities regulations for companies that issue stock.
(Part of GAAP) |
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International Accounting Standards Board:identifies preferred accounting practices - standardization of financial statements.
(Part of GAAP) |
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| Generally Accepted Accounting Principles: concepts and rules that aim to make info in financial statements relevant, reliable, and comparable. |
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Identifying economic events; involves selecting economic activities to a particular org.
-once identified, it is recorded to provide financial history through financial reports. |
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| Three steps to accounting? |
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Definition
1) Identify: select economic events/transaction
2) Record: record, classify, summarize. (Bookkeeping)
3) Communicate: prepare reports, analyze, interpret. |
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| Two subcategories of communication? |
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| To (1) internal and (2) external Users |
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| Management or supervisors (Managerial Accounting) |
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| investors, creditors, etc. (Financial Accounting) |
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| provides econ. info for external users |
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| Provides econ info for internal users. |
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| Two orgs responsible for establishing GAAP |
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Definition
1) FASB: Financial Accounting Standards Bureau - Establishes broad acc. principles
2) SEC: Security and Exchange COmmission - Gov. Agency that requires companies to file financial reports following GAAP |
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Definition
transaction data only be recorded in terms of money in an accounting record
(Note: added assumption that unit of measure, $, remains sufficiently constant) |
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| Business owned by one person |
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| Business owned by two or more persons associated as partners |
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business organized as seperate legal entity under state corporation law, and having ownership divided into transferable shares of stock.
(Acts through its managers) |
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| Basic Accounting Equasion |
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| Assets = Liabilities + Owners Equity |
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Definition
Resources that provide future economic benefits
(Ex: building, can get $ for it)
aka
resources owned by business that are used for activities such as production, consumption, and exchange |
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| Creditor claims against assets that represent the debts and obligations of the entity. |
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Owners residual claims on total assets
(Part of assets owner owns)
= total assets - total liability |
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| Subset of owners equity - the owners investment in the business |
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Definition
the withdrawal of of cash or other assets for the personal use of the owner
(Must be recorded) |
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| Gross increase in owners equity from business activities |
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| economic events between company and some outside enterprise |
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| Economic events that occur entirely within one company |
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Presents
1) Revenues
2)Expenses
3)Net Income
for a specific period of time |
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| summarizes changes in owners equity for a specific period of time. |
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Definition
| Records Assets, liabilities, and owners equity for a specific period of time. |
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Definition
| It identifies, records, and communicates. |
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Term
| What kind of Information does Accounting Communicate? |
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Definition
| Relevant, Reliable and Comparable information. |
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Term
| Financial Accounting Standard Board |
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Definition
| Sets the Standards for accounting across the board. |
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Term
| Revenue Recognition Principle |
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Definition
*Revenue is recognized when earned.
*Proceeds need not be in cash
*Measure revenue by cash and value of items received. |
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