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Intermediate accounting
chapters 1-3
73
Accounting
Undergraduate 3
02/09/2012

Additional Accounting Flashcards

 


 

Cards

Term
Four financial statements 
Definition

Balance Sheet 

Cash Flow Statement 

Income Statement 

Statement of Equity 

Term
What kind of setting are the four statements?
Definition
Standard Setting 
Term
Six Standard Setters 
Definition
SEC, CAP, APB, FASB, AICPA, PPE 
Term
SEC (Security and Exchange Commision) 
Definition

accounting and reporting for public companies, encourged private companies to adhere to GAAP, 

Enforcement authority. && CAP, APB, and FASB are all branched from SEC 

Term
CAP (Committee of Accounting Principles )
Definition
1939-1959, issued 51 ARBs (Accounting Research Bulletins, problem-by-problem approach failed. 
Term
APB (Accounting Principles Board )
Definition
1959-1973, issued 31 APBOs (accounting principle board opinions), Wheat committee recommedations adopted in 1973. 
Term
FASB (Financial Accounting Standards Board) 
Definition
Mission to establish and improve standards of financial accounting and reporting. (current accounting)
Term
FASB vs APB
Definition
FASB: Smaller membership, full-time, remunerated memebership, freater authority, increased independence, broader representation. 
Term
AICPA (American Institute of Certified Public Accountants) 
Definition
National professional organization, established CAP && APB (current accounting) 
Term
Essential characterisitcs of accounting 
Definition

1. ID, measurement, and communication of financial info about 

2. economics entities to 

3. interested parties

Term

Financial Reporting 

 

Definition
provide financial info about the reporting entitiy that is useful to present and potential equity investors, lenders, and other creditors. 
Term
GAAP (General Accepted Accounting Principles) 
Definition
the accounting profession as attempted to develop a set of standards that are generally accepted and universally practiced. 
Term
substancial authortative support (major sources of GAAP)
Definition

FASB standards, interpretations, and staff positions

APB opinions

AICPA accounting research bulletins  

Term
IAS (International Accounting Standards) 
Definition
two sets of standards accepted: US GAAP by FSAB && IFRS (International Financial Reporting Standards)  
Term
Conceptual Framework 
Definition
Three levels, 1st, 2nd, 3rd 
Term
Need for Conceptual Framework 
Definition
to develop a coherent set of standards and rules && to solve new and emerginig practical problems. 
Term
Statements of Financial Accounting Concepts (SFAC) 
Definition
there are seven of them 
Term
SFAC no. 1 
Definition
objective of financial reporting 
Term
SFAC no. 2
Definition
Qualitative Characteristics of Accounting info
Term
SFAC no. 3
Definition
elements of financial statements 
Term
SFAC no. 5
Definition
recognition and mesurement in financial statemtns 
Term
SFAC no. 6
Definition
elements of financial statements (replaces SFAC no. 3)
Term
SFAC no. 7
Definition
using cash flow infoan present value in accounting measurements 
Term
SFAC no. 8
Definition
the objective of general purpose financial reporting and qualitative characterisics of useful financial information (replaces SFAC no. 1 && 2) 
Term
First level of Conceptual Framework 
Definition
Basic Objectives (SFAC no. 1) 
Term
Second level of Conceptual Framework 
Definition
Qualitative Characteristics and Elements (SFAC nos. 2 && 3)
Term
Third level of Conceptual Framework 
Definition
Recognition, Measurement, and Disclosure concepts (SFAC no. 5-8) 
Term
Basic Objectives 
Definition
level one: to provide financial info bout the reporting entitiy that is useful to present and potential equity investor, lenders, and other creditiors in making decisions about providing resources to the entity. 
Term
Fundemental Concepts 
Definition
level two: qualitative characteristics "the FASB id the Qualitative Characteristics of accounting info that distinguish better info from inferior info from decision-making purposes." 
Term
Qualitative Characteristics
Definition
Fundemental qualities, enhancing qualitites 
Term
Fundemental Qualities 
Definition
Relevance && Faithful representation 
Term
Relevance 
Definition
predictive value, confirmatory value, && materiality 
Term
Faithful representation
Definition
completeness, neutality, free from error 
Term
predictive value 
Definition
it has a value as an imput to predictive processes used by investors to form their own expectations about the future 
Term
Confirmatory value 
Definition
relevant info also helps users confirm or correct prior expectations 
Term
materiality 
Definition
if omitting it or misstating it could influence decisions that users make on the basis of the reported financial info 
Term
completeness
Definition
that all the info that is necessary for faithful rep. is provided 
Term
neutrality 
Definition
that a company cannot select info to favor one set of interested parties over another 
Term
free from error 
Definition
be more accurate rep of financial item, no material error 
Term
enhancing qualities 
Definition
comparabitily, verifiability, timeliness, understandabilty
Term
comparabitlity
Definition
info that is measured and reporting in a similar manner for different companies 
Term
varifiability
Definition
when independent measures, using the same methods, obtain similiar results 
Term
timeliness 
Definition
having info avaliable to decision-makers before it looses its capacity to influence decisions
Term
understandability 
Definition
the quality of info that lets reasonably informed usuers see it significance 
Term
second level: basic elements 
Definition
"moment in time" and "period of time"
Term
"moment in time" : balance sheet 
Definition
assets, liabilities, equity 
Term
"period of time" (fiscal year): income statement and state of equity
Definition
revenue && expeneses (gains && losses); investment by owners, distribution to owners, comprehensive income
Term
Third Level: Basic Assumptions 
Definition
economic entity, going concern, monetary unit, periodcity 
Term
economic entity 
Definition
company keeps its activities separate from its owners and other businesses 
Term
going concern 
Definition
company last long enough to fulfill objectives and commitments 
Term
monetary unit
Definition
money is the common denomenator 
Term
periodicity 
Definition
company can divide its economic activites into time periods 
Term
Basic Principles 
Definition
measurement, revenue recognition, expense recognition, full disclosure 
Term
Measurement 
Definition
most commonly used measurements are based on historcial cost and fair value. 
Term
revenue recognition 
Definition
generall occurs when realized or when earned 
Term
expense recognition 
Definition
"let the expense follow the revenue" 
Term
full disclosure
Definition
providing info that is of sufficent importance to influence the judgement and decisions of an informed user 
Term
Contraints 
Definition
Cost and Industry practice 
Term
Cost 
Definition
cost of providing info must be weighed against the benefits that can be derived from using it 
Term
Industry Practice
Definition
the peticuliar nature of some industries and business concerns sometimes requires departure from basic accouting theory. 
Term
AIS (Accountin Info System) 
Definition
collects and processes transaction data && disseminates the info to interested parties. 
Term
event 
Definition
third party (outsider)
Term
transaction 
Definition
company is doing external & internal buying and selling
Term
real accounts 
Definition
perinate accounts
Term
nominal accounts 
Definition
temporary accounts 
Term
ledger 
Definition
one entry for each transaction 
Term
journal 
Definition
list of all transactions 
Term
posting
Definition
post transactions to each ledger 
Term
trial balance
Definition
adding all the debits and credits 
Term
adjusting entries 
Definition
the entries that have changed in the certain time span 
Term
financial statements
Definition
all the statments that we work with balance sheet, income statment, cash flow, && statement of equity 
Term
Debits
Definition
assets and expenses are debited 
Term
credits
Definition
liabilities, equity and revenue are credited 
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