Term
|
Definition
- is a standardized format that organizations use to accumulate the dollar effect of transactions on each financial statement item.
|
|
|
Term
|
Definition
- are economic resources with probable future benefits owned by the entity as a result of past transactions.
- what the firm owns
- includes cash, short-term investment, accounts receivable, notes receivable, inventory, supplies, prepaid expenses, long-term investments, equipment, buildings, land, intangibles
|
|
|
Term
|
Definition
- exception suggests that care should be taken not to overstate assets and revenues or understate liabilities and expenses.
|
|
|
Term
| Continuity (Going-Concern) Assumption |
|
Definition
- states that businesses are assumed to continue to operate into the foreseeable future.
|
|
|
Term
|
Definition
- results from owners providing cash (and sometimes other assets) to the business.
|
|
|
Term
|
Definition
- is on the right side of an account.
|
|
|
Term
|
Definition
- are assets that will be used or turned into cash within one year. Inventory is always considered a current asset regardless of the time needed to produce and sell it.
|
|
|
Term
|
Definition
- are obligations that will be settled by providing cash, goods, or services within the coming year.
|
|
|
Term
|
Definition
- is on the left side of an account.
|
|
|
Term
| Historical Cost Principle |
|
Definition
- requires assets to be recorded at historical cost–cash paid plus the current dollar value of all noncash considerations given on the date of the exchange.
|
|
|
Term
|
Definition
- is an accounting method for expressing the effects of a transaction on accounts in a debits-equal-credits format.
|
|
|
Term
|
Definition
- are probable debts or obligations of the entity that result from past transactions, which will be paid with assets or services.
- what the firms owes to creditors
- includes accounts payable, accrued expenses, notes payable, taxes payable, unearned revenue, bonds payable
|
|
|
Term
|
Definition
- suggests that small amounts that are not likely to influence a user's decision can be accounted for in the most cost-beneficial manner.
|
|
|
Term
| Primary Objective of External Financial Reporting |
|
Definition
- is to provide useful economic information about a business to help external parties make sound financial decisions.
|
|
|
Term
|
Definition
- can influence a decision; it is timely and has predictive and/or feedback value.
|
|
|
Term
|
Definition
- is accurate, unbiased, and verifiable.
|
|
|
Term
|
Definition
- refers to the cumulative earnings of a company that are not distributed to the owners and are reinvested in the business.
|
|
|
Term
| Separate-Entity Assumption |
|
Definition
- states that business transactions are accounted for separately from the transactions of owners.
|
|
|
Term
| Stockholders' Equity (Owners' or Shareholders' Equity) |
|
Definition
- is the financing provided by the owners and business operations.
- investment by owners
- includes contributed capital, retained earnings
|
|
|
Term
|
Definition
- is a tool for summarizing transaction effects for each account, determining balances, and drawing inferences about a company's activities.
|
|
|
Term
|
Definition
- is (1) an exchange of assets or services for assets, services, or promises to pay between a business and one or more external parties to a business or (2) a measurable internal event such as the use of assets in operations.
|
|
|
Term
|
Definition
- is the process of studying a transaction to determine its economic effect on the business in terms of the accounting equation.
|
|
|
Term
| Unit-of-Measure Assumption |
|
Definition
- states that accounting information should be measured and reported in the national monetary unit.
|
|
|
Term
|
Definition
- Assets, Liabilities, Equity
- balances transfer to next period
|
|
|
Term
|
Definition
- Revenues, Expenses
- accounts that are closed
|
|
|
