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ACCTG 331 - Exam 1
| Term | Definition |
|---|---|
| Capital Markets | Provide a mechanism to help the economy allocate resources efficiently |
| Rate of Return Formula | (Dividends + how much your share increases) / initial investment |
| Cash Basis Accounting | Measurement of cash receipts and cash payments from transactions related to providing goods and services |
| Accrual Basis Accounting | Measurement of revenues and expenses, regardless of when cash is received or paid. |
| Generally Accepted Accounting Principles (GAAP) | a dynamic set of both broad and specific guidelines that companies should follow when measuring and reporting the information in their financial statements and related notes. |
| Securities and Exchange Commission (SEC) | Created by Congress in response to the stock market crash of 1929. Goal was to restore investor confidence. |
| 1933 Securities Act | Applies to initial offerings of securities (stocks and bonds) |
| FASB | Current standard setting body |
| International Acctg Standards Committee | Formed to develop global accounting standards |
| Ethics | deals with the ability to distinguish right from wrong |
| Predictive Value | Information is useful in predicting the future |
| Relevant | Pertinent to the decision at hand |
| Timeliness | Information is available before you need it |
| Distribution to Owners | Decreases in equity resulting from transfers to owners |
| Confirmatory value | Information confirms expectations |
| Understandability | Users understand the information in the context of the decision being made |
| Gain | Increases in equity not resulting from revenues or investments by owners |
| Faithful representation | Agreement between a measure and the phenomenon it purports to represent |
| Comprehensive Income | change in equity from nonowner transactions |
| Materiality | Concerns the relative size of an item and its effect on decisions |
| Comparability | Important for making interfirm comparisons |
| Neutrality | The absence of bias |
| Recognition | The process of admitting information into financial statements |
| Consistency | Applying the same accounting practices over time |
| Cost effectiveness | Requires consideration of the costs and value of information |
| Verifiability | Implies consensus among different measurers |
| Expense Recognition | Record expenses in the period the related revenue is recognized |
| Periodicity assumption | The life of an enterprise can be divided into artificial time periods |
| Historical cost principle | The original transaction value upon acquisition |
| Revenue recognition | Criteria usually satisfied for products at point of sale |
| Going concern assumption | The entity will continue indefinitely |
| Monetary unit assumption | A common denominator is the dollar |
| Economic entity assumption | The enterprise is separate from its owners and other entities |
| Full-disclosure principle | All information that could affect decisions should be reported |
| Net Realizable value | Estimated selling price minus reasonably predictable costs |
| Current cost | Cost that would be incurred to purchase or reproduce the asset |
| Present Value | The CURRENT value of future cash flows, calculated by applying the time value of money |
| Fair value | Price that would be received to sell assets or paid to transfer liabilities in an orderly market transaction |
| Capital markets are made up of.... | Investors and creditors |
| What standard did IASB introduce | International Financial Reporting Standards (IFRS) |
| Financial information is _____ if omitting it or misstating it could affect users' decisions | Material |
| The income statement is a ____ statement | change |
Created by:
sekavecr