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ACC 2100
Chapter 2
| Question | Answer |
|---|---|
| Classified Balance Sheet | groups similar assets and liabilities |
| Assets (four categories) | current assets, long term investments, PPand E (Property, Plant and Equipment), Intangible assets |
| Current Assets (list 7 examples) | (short term) Cash, debt investments, accounts receivable, notes receivable, inventory, supplies, prepaid insurance |
| Long term Investments (list 2 examples) | (long term) Securities in another cooperation (stocks and bonds), investment in real estate aka lang held for investmetn |
| Property, Plant and Equipment (oddball?) | (Long term) Land, buildings, equipment, subtract accumulated decreciation |
| Intangible Assets | (long term) no physical substance. Patents, goodwill, trademark, copyright. |
| Liabilities (two) | Current and Long term. |
| Current Liabilites (oddball?) | debt will be paid in one year or less. Accounts payable, salaries payable, possibly notes payable, utilities payable, unearned revenue |
| Long Term Liabilites | maturity date is over 1 year. Mortgage, Bonds, possibly notes payable |
| Order of liquidity for current assets (7) | 1.Cash 2.Short-term Investments 3.Accounts Receivable 4.Notes Receivable 5.Inventory 6.Supplies 7.Prepaid Expenses |
| GAAP | Generally Accepted Accounting Principals. standards created in consultation with the accounting profession and the business community |
| SEC | Securities and Exchange Commission. the agency in the U.S. government that oversees US financial markets and accounting standard setting bodies. |
| FASB | Financial Accounting Standards Board. is the primary accounting standard-setting body in US |
| IASB | International Accounting Standards Board |
| IFRS | international financial reporting standards. Issued by IASB |
| Sarbanes Oxley Act | created the Public Company Accounting Oversight Board (PCAOB) reviews the performance of auditing firms. |
| Monetary unit expectatoin | Items not easily quantified in dollar terms are not reported in the financial statements |
| Faithful Representatoin | Accounting information must be complete, neutral, and free from error |
| Economic entity assumption | Personal transactions are not mixed with the company’s transactions |
| Cost Constraint | The cost to provide information should be weighed against the benefit that users will gain from having the information available |
| Consistency | A company’s use of the same accounting principles from year to year |
| Historical Cost Principle | Assets are recorded and reported at original purchase price |
| Relevance | Accounting information should help users predict future events, and should confirm or correct prior expectations |
| Periodicity assumption | The life of a business can be divided into artificial segments of time |
| Full disclosure principle | The reporting of all information that would make a difference to financial statement users |
| Materiality | The judgment concerning whether an item’s size makes it likely to influence a decision-maker |
| Going Concern assumption | Assumes a business will remain in operation for the foreseeable future. |
| Comparability | Different companies use the same accounting principles |
Created by:
mghamiter
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