Term
| The conceptual framework contains how many Statements of Financial Accounting Concepts? |
|
Definition
| Six. 1: Objectives, 2: Qualitative Characteristics 3: Elements 4. Recogn/measuremnet 5. Elements/nonprofit 6. Cash flow info |
|
|
Term
| Two Overriding Constraints as part of the conceptual framework |
|
Definition
| Cost-Benefits and Materiality |
|
|
Term
| Conceptual framework has how many levels? |
|
Definition
| Three. First Level: Objectives Second Level: Qualitative Characteristics Second Level: Financial Statement Elements Third Level: Recognition and measurements of financial reporting |
|
|
Term
|
Definition
| The pervasive criterion of accounting information is decision usefulness. |
|
|
Term
| First Level: Objectives (continued) |
|
Definition
| About economic resources and claims to those resources.Useful to those making investment and credit decisions. Helpful to present and potential investors, creditors, and other users |
|
|
Term
| Second Level: Qualitative Characteristics |
|
Definition
| Ten in total: Relevence (Timeliness, PV, FV (Information that confirms a user's earlier expectations), Reliability (Nuetrality, Verifiablity, RF), Comprehensive, Comparability |
|
|
Term
|
Definition
| Verifiable (high degree of consensus), representationally faithful, neutrality (ignores consequence of a standard) |
|
|
Term
|
Definition
| Predictive Value, Feedback Value, timeliness (issuance of interim reports) |
|
|
Term
| Comparablity (Secondary)(Qualitative) |
|
Definition
| (TO REMEMBER: SAME INDUSTRY)Information that has been measured and reported in a similar manner for different enterprises is considered this. |
|
|
Term
| Consistancy (Secondary)(Qualitative) |
|
Definition
| Imparative for providing comparisons of a company from period to period |
|
|
Term
| Second Level: Financial Statement Elements |
|
Definition
| Ten in total: Assets and Liabilities, Equity, Distrib to owners, investment by owners, comprehensive income, revenue and expenses (income statement), gains and losses (peripheral) |
|
|
Term
|
Definition
| Items characterized by service potential or future economic benefit |
|
|
Term
|
Definition
| Obligation to transfer resources arising from past transaction. |
|
|
Term
|
Definition
| Residual interest in the assets - liabilities. |
|
|
Term
|
Definition
| Arises from income statement activities from major operations. Revenue is recognized at the time of sale/Expenses recognized when Work or product actually makes its contribution to revenue |
|
|
Term
|
Definition
| Period costs, such as administrative salaries, are expensed in the period when incurred because there is no direct relationship between the cost and revenues. |
|
|
Term
|
Definition
| Rises/decreases from a peripheral or incidental transaction |
|
|
Term
|
Definition
Comprehensive income includes net income and all other changes in equity exclusive of owners'
investments and distributions.
It is more inclusive than the traditional notion of net income.Unrealized holding gains on available-for-sale securities are included in comprehensive income. |
|
|
Term
|
Definition
| Increases in net asset in a period from non-owner sources (Increase in assets - liabilties + owner dis -owner invest) |
|
|
Term
|
Definition
| Which of the following elements of financial statements is the result of transactions, events, or circumstances that affect an enterprise during a period of time |
|
|
Term
| Investment by owners OR comprehensive income |
|
Definition
| Increases ownership interest |
|
|
Term
|
Definition
| Declares and pays cash dividends to owners/Increases assets during the period by purchasing company's own stock. |
|
|
Term
| Third Level: Recognition and measurements of financial reporting |
|
Definition
| Assumptions, principles, and constraints |
|
|
Term
| Third Level A: Assumptions |
|
Definition
| Four total: Econ entity, going concern, monetary unit, periodicity |
|
|
Term
|
Definition
| The assumption that implies that the economic activities of an enterprise can be divided into artificial time periods is the periodicity assumption. The periodicity assumption suggests that the economic life of a business can be divided into artificial time periods such as a month, quarter or year. |
|
|
Term
|
Definition
| Rational why things aren't recorded at liquidation value- assumption business will survive. justification for depreciation and amortization. If a firm is not going concern, non-historical cost values are appropriate. makes the current – noncurrent classification of assets and liabilities on the balance sheet useful |
|
|
Term
|
Definition
| Assumes that the dollar is the measuring stick used to report |
|
|
Term
| Economic Entity Assumption |
|
Definition
| Business and personal records should be seperate |
|
|
Term
| Third Level B: Principles |
|
Definition
| Four: Matching, Full Disclosure, Revenue Recognition, and Historical Cost |
|
|
Term
| Full Disclosure Principle |
|
Definition
| All relevent financial information is reported. Disclosure may also be accomplished through supplementary information, not just notes/statements |
|
|
Term
| Historical Cost Principle |
|
Definition
| Indicates that market value changes subsequent to purchase are not recorded in accounts. |
|
|
Term
|
Definition
| Allocates expenses to revenue in the proper period |
|
|
Term
| Revenue Recognition Principle |
|
Definition
| GENERALLY REVENUE SHOULD BE RECOGNIZED AT TIME OF SALE BUT Exceptions are: In certain circumstances revenue may be recognized during production, at the end of production or after the sale once cash is received. |
|
|
Term
| Third Level C: Constraints |
|
Definition
| Conservatism, Industry Practices, Cost-Benefit and Materiality |
|
|
Term
|
Definition
| Requires that information significant enough to affect the decision of informed users should be disclosed!! (Under 5% net income..not material) |
|
|
Term
|
Definition
| An items impact on the company's overall financial operations. If their inclusion impacts the judgement of a reasonable person- its' material. QUAL and QUANT factors must be considered. |
|
|
Term
|
Definition
| Anticipates losses, but doesnt report gains |
|
|
Term
| Industry Practices Constaint |
|
Definition
| permits use of market valuation in specific situations!!! |
|
|
Term
|
Definition
| Weight the cost of providing information against the benefits that can be dervived from using it. |
|
|
