Term
| General Purpose Financial Reporting |
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Definition
| Proving financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity. |
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| Financial Accounting Standards Board |
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| Basic Accounting Equation |
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| Assets = Liabilities + Owner's Equity |
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| Those events between the enterprise and it's environment. |
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| Relate to transactions totally within the enterprise. |
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| A systematic arrangement that shows the effect of transactions and other events on a specific asset, liability or equity. |
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| Expenses incurred but not yet paid. |
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| Revenues for which the performance obligation has been satisfied but for which cash has not yet been received. |
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| A trial Balance prepared immediately after all adjustments have been posted. |
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| Entries made at the end of an accounting period to bring all accounts up to date on an accrual accounting basis. |
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| The financial statement that shows the financial condition of the enterprise at the end of the period. |
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| The formal process by which all nominal accounts are reduced to zero and the net income or loss is determined and transferred to the owners' equity account. |
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| The right hand side of an account |
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| the left hand side of an account. |
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| a system that records the dual effects of each transaction in its appropriate account. |
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| A happening of consequence. |
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| Statements that reflect the collection, tabulation, and final summarization of the accounting data. |
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| A collection of all the asset, liability, owners' equity, revenue, and expense accounts. |
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| the financial statement which measures the results of operations during the period. |
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| the book of original entry where transactions and selected other events are initially recorded. |
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| the book containing the accounts. |
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| temporary accounts are revenue, expense and dividend accounts except for dividends they appear on the income statement. |
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| post closing trial balance |
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| a trial balance prepared immediately after closing entries have been posted. |
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| the process of transferring the essential facts and figures from the book of original entry to the ledger accounts. |
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| an item paid and recorded in advance of its use or consumption, part of it properly represents expense of the current period and part represents an asset on hand at the end of the period. |
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Definition
| real accounts are assets, liabilities, and equity accounts and they appear on the balance sheet. |
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| Entries at the beginning of the next accounting period that are the exact opposite of the adjusting entries made in the previous period. |
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| the financial statement which measures the cash provided and used by operating, investing, and financing activities during the period. |
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| Statement of retained earnings |
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Definition
| the financial statement which reconciles the balance of the retained earnings account from the beginning to the end of the period. |
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| contains the details related to a given general ledger account. |
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| an external event involving transfer or exchange between two or more entities. |
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| a list of all open accounts in the ledger and their balances. |
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| cash received and recorded as a liability because the service obligation has not yet been satisfied by providing goods or services to customers. |
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| a worksheet used to help a company prepare its financial statements. |
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| Depreciation, Amortization and Depletion |
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Definition
| parts of the original cost is an expense each period the assets are used by the company. |
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Definition
| The information can help users form expectations about the future. |
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| the information validates or refutes expectations based on previous evaluations. |
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| information is material if omitting it or misstating it could influence decisions that users make on the basis of the reported financial information. |
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| all necessary information is provided |
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| the information is unbiased |
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| the information is accurate |
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| probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events. |
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| 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. |
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| Residual interest in the assets of an entity that remains after deducting its liabilities. In a business enterprise, the equity is the ownership interest. |
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| Increases in net assets of a particular enterprise resulting from transfers to it from other entities of something of value to obtain or increase ownership interests in it. Assets are most commonly received as investments by owners, but that which is received may include services or satisfaction or conversion of liabilities of the enterprise. |
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| Decrease in net assets of a particular enterprise resulting from transferring assets, rendering services, or incurring liabilities by the enterprise to owners. Distributions to owners decrease ownership interests in an enterprise. |
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| Change in equity of an entity during a period from transactions and other events and circumstances from non-owner sources. it includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. |
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| inflows or other enhancements of assets of an entity or settlement of its liabilities during a period from delivering or producing goods, rendering services, or other activities that constitute the entities ongoing major or central operations. |
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| outflows or other using up of assets or incurrences of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major or central operations. |
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| increases in equity from peripheral or incidental transactions of an entity and from all other transactions and other events and circumstances affecting the entity during a period except those that result from revenues or investments by owners. |
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| decrease in equity from peripheral or incidental transactions of an entity and from all other transactions and other events and circumstances affecting the entity during a period except those that result from expenses or distributions to owners. |
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| Economic Entity Assumption |
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Definition
| The economic activities of a company can be accumulated and reported in a manner that assumes the company is separate and distinct from its owners or other business units. |
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| In the absence of contrary information, a company is assumed to have a long life. The current relevance of the historical cost principle is dependent on this assumption. |
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| money is the common denominator of economic activity and provides an appropriate basis for accounting measurement and analysis. Assumed to remain stable over the years in terms of purchasing power. In essence, this assumption disregards any inflation or deflation in the economy in which the company operates. |
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| The life of a company can be divided into artificial time periods for the purpose of providing periodic reports on the economic activities of the company. |
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| Historical cost principle |
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| acquisition cost is considered a reliable basis upon which to account for assets and liabilities of a company. |
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| the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. |
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| Expense Recognition Principle |
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Definition
| recognition of expenses is related to the net changes in assets and earning revenues. Is implemented in accordance with the definition of expense by matching efforts with accomplishments. |
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| Full Disclosure Principle |
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Definition
| in the preparation of financial statements, the accountant should include sufficient information to permit the knowledgeable reader to make an informed judgment about the financial condition of the company in question. |
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| relates to the notion that the benefits to be derived from providing certain accounting information should exceed the costs of providing that information. |
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| is the amount of a company's current period earnings attributable to one share of common stock. |
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| cumulative earnings less cumulative dividend distributions since inception. |
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| a debit balance in retained earnings |
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| Restricted retained earnings |
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| may be disclosed parenthetically alongside the RE balance or in footnote. |
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| recorded in separate account |
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| total amount invested by the stockholders (preferred stock, common stock) |
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| accumulated other comprehensive income |
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Definition
| specific types of gains or losses that are not included in net income |
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| shares of the corporation stock that it has purchased or reacquired. considered issued but no longer are outstanding. |
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| cash, converted cash, sold, or consumed during the normal operating cycle of the business. |
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| obligations which mature or are settled within year or operating cycle of business. |
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| means an entity's ability to settle its obligations as they mature |
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