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Accounting chp 1
Various Terms
Question | Answer |
---|---|
Predictive Value | Information is useful in predicting the future. |
Relevance | Pertinent to the decision at hand. |
Timeliness | Information is available prior to the decision. |
Distribution to owners | Decreases in equity resulting from transfers to owners. |
Confirmatory Value | Implies consensus among different measurers. |
Understandability | Users understand the information in the context of the decision being made. |
Gain | Results if an asset is sold for more than its book value. |
Faithful representation | Agreement between a measure and the phenomenon it purports to represent. |
Comprehensive Income | The 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. |
Assets | probably future economic benefits obtanied or controlled by an entity |
Liabilities | probably future sacrifices of economic benefits arising from present obligations to transfer assets or future services. |
equity | residual interest in the assets of an entity after deducting liabilities |
investments by owners | increase in 3equity resulting from transfers to it from other entities |
distribution to owners | decreases in equity of a particular enterprise resulting from transfers to owners |
comprehensive income | change in equity of a business enterprise during a period from transactions and other events an |
Revenue | inflows of assets or settlemnts of liabilties during a period from delivering goods in central operations |
expenses | ouflows or other using up of assets or incurrences of liabilites |
gains | increases in equity from peripheral or incidental transactions of an entity |
losses | represent decreases in equity arising from peripheral incidental transactions of an entity |