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Lesson 3: Accrual Accounting

Terms in this set (12)

GAAP
1. he majority of GAAP includes the pronouncements issued by the Committee on Accounting Procedure (CAP), the Accounting Principles Board (APB), and the Financial Accounting Standards Board (FASB).
What does generally accepted accounting principles (GAAP) address?
Recognition, measurement, and disclosure
What body developed generally accepted accounting principles (GAAP)?
The Financial Accounting Standards Board (FASB)
Which agency enforces generally accepted accounting principles (GAAP)?
The Securities and Exchange Commission (SEC).
When are expenses recognized under accrual accounting?
Expenses are recognized when incurred, regardless of the period of cash payment.
When is revenue recognized under accrual accounting?
Revenues are recognized when earned and collection is reasonably assured, regardless of the period of cash collection.
What are the seven key components of the general-purpose external financial report?
Income statement
Balance sheet
Statement of cash flows
Statement of retained earnings
Statement of comprehensive income
Footnote disclosures
Auditor's opinion
What is the classification of assets that are in the form of cash, or will be converted into cash, or will be consumed within one year or the operating cycle of the business, whichever is longer?
The classification is current assets.
What is the Accounting Principles Board?
The entity that published 31 opinions, some of which are now part of the Codification.
What are long-term assets?
Long-term assets are reported on the balance sheet and represent a company's property, equipment, and other capital assets (reduced by depreciation) expected to be usable for more than one year.
What purpose does the Financial Accounting Standards Board (FASB) Accounting Standards Codification serve?
The FASB Accounting Standards Codification is the sole source of authoritative U.S. generally accepted accounting principles for nongovernmental entities, except for the Securities and Exchange Commission guidance.
What topics does the Financial Accounting Standards Board (FASB) Accounting Standards Codification not include?
Other comprehensive basis of accounting
Cash basis
Income tax basis
Regulatory accounting principles
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