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Accounting 3 Final Exam
Chap 1, 2, 3, 4, and 7
43
Accounting
12/15/2008

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Term
Predictive Value
Definition
Information is useful in predicting the future.
Term
Relevance
Definition
Pertinent to the decision at hand.
Term
Timeliness
Definition
Information is available prior to the decision.
Term
Distribution to owners
Definition
Decreases in equity resulting from transfers to owners.
Term
Feedback Value
Definition
Information confirms expectations.
Term

Reliability

Definition
Along with relevance, a primary decision-specific quality.
Term
Gain
Definition
Results if an asset is sold for more than its book value.
Term
Representational Faithfulness
Definition
Agreement between a measure and the phenomenon it purports to represent.
Term

Comprehensive Income

Definition
The change in equity from nonowner transactions.
Term
Materiality
Definition
Concerns the relative size of an item and its effect on decisions.
Term
Comparabilty
Definition
Important for making interfirm comparisons.
Term
Neutrality
Definition
Accounting information should not favor a particular group.
Term
Recognition
Definition
The process of admitting information into financial statements.
Term
Consistency
Definition
Applying the same accounting practices over time.
Term
Cost Effectiveness
Definition
Requires consideration of the costs and value of information.
Term
Verifiability
Definition
Implies consensus among different measurers.
Term
Matching Priniciple
Definition
Record expenses in the period the related revenue  is recognized.
Term
Periodicity
Definition
The life of an enterprise can be divided into artificial time periods.
Term
Historical Cost Principle
Definition
The original transaction value upon acquisition.
Term
Realization Principle
Definition
Criteria usually satisfied at point of sale.
Term
Going Concern Assumption
Definition
The entity will continue indefinitely.
Term
Monetary Unit Assumption
Definition
A common denominator is the dollar.
Term
Economic Entity Assumption
Definition
The enterprise is separate from its owners and other entities.
Term
Full-disclosure Principle
Definition
All information that could affect decisions should be reported.
Term
Conservatism
Definition
Not a qualitative characteristic, but a practical justification for some accounting choices.
Term
Source Documents
Definition
Used to identify and process external transactions.
Term
Transaction Analysis
Definition
Determine the dual effect on the accounting equation.
Term
Journal
Definition
Record of the dual effect of a transaction in debit/creidt form.
Term
Posting
Definition

Transferring balances from the journal to the ledger.

Term
Unadjusted Trial Balance
Definition
List of accounts and their balances after recording adjusting entries.
Term
Cash Equivalent
Definition
One-month U.S. Treasury bill.
Term
Adjusting Entries
Definition
Internal events recorded at the end of a reporting period.
Term
Adjusted Trial Balance
Definition
List of accounts and their balances after recording adjusting entries.
Term
Financial Statements
Definition
Primary means of disseminating information to the extermal decision makers.
Term
Closing Entries
Definition
To zero out the owners' equity temporary accounts.
Term
Post-closing Trial Balance
Definition
List of accounts and their balances after recording closing entries.
Term
Worksheet
Definition
A means of organizing information: not part of the formal accounting system.
Term
Balance Sheet
Definition
An organized array of assets,liabilities and equity.
Term
Liquidity
Definition
Relates to the amount of time before an asset is converted to cash or a libility is paid.
Term

Working Capital

Definition

Current assets minus current liabilities

Term
Subsequent Events
Definition
Occurs after the fiscal year-end but before the statements are issued.
Term
Unqualified Opinion
Definition
The statements are presented fairly in conformity with GAAP.
Term
Accrued Liabilities
Definition
Recorded when an expense is incurred but not yet paid.