Accounting Intermediate II Ch. 1
Terms in this set (53)
Probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events.
Probable future economic benefits owned by the company.
Inflows of assets from ongoing, major activities.
Decrease in equity from peripheral or incidental transactions.
Obligation to transfer cash or other resources as a result of a past transaction.
Dividends paid by a corporation to its shareholders. Declares and pays cash dividends to owners
Distribution to owners
Inflows or other enhancement of assets of an entity or settlements of liabilities from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major, or central, operations.
The financial position of a company.
Assets, liabilities and equity
The change in equity of a business enterprise during a period from nonowner transactions.
Increase in equity from peripheral or incidental transaction.
Decrease in equity from peripheral or incidental transactions
The owners' residual interest in the assets of a company, after deducting liabilities
Probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events.
Revenues plus gains less expenses and losses.
Increases in equity resulting from transfers of resources (usually cash) to a company in exchange for ownership interest.
Investment by owner
Outflows or other using up of assets or incurrences of liabilities during a period from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations.
Information is useful in predicting the future.
Pertinent to the decision at hand.
Information is available prior to the decision.
Decreases in equity resulting from transfers to owners.
Distribution to owners
Information confirms expectations.
Users understand the information in the context of the decision being made.
Results if an asset is sold for more than its book value.
Agreement between a measure and the phenomenon it purports to represent.
The change in equity from nonowner transactions.
Concerns the relative size of an item and its effect on decisions.
Important for making interfirm comparisons.
The absence of bias.
The process of admitting information into financial statements.
Applying the same accounting practices over time.
Requires consideration of the costs and value of information.
Implies consensus among different measurers.
What is the objective of general purpose financial reporting?
To provide provide financial information about companies that is useful to capital providers in making decisions. (investors and creditors)
What are the two fundamental qualitative characteristics of useful financial information?
Relevance and faithful representation
What is the name of the document in which US GAAP are published? Spell out the name; don't just use the acronym.
ASC Standard Codification
FASB ASC 310-10-25-2 What is 2?
FASB ASC 310-10-25-2 What is 10?
FASB ASC 310-10-25-2 What is 25?
FASB ASC 310-10-25-2 What is 310?
What are the "relevance" qualitative characteristics?
Predictive value; confirmatory value; materiality
What are the "faithful representation" qualitative characteristics?
Completeness; Neutrality; Free from error
What are the enchaining qualitative characteristics?
Comparability; Verifiability; Timeliness; Understandability
The Conceptual Framework
is a coherent system of interrelated objectives and fundamental concepts that prescribes the nature, function, and limits of financial accounting and reporting and that is expected to lead to consistent guidance.
who is likely to be the most direct beneficiary of the guidance provided by Concepts Statements"?
To assess an entity's prospects for future net cash inflows,"
1) Resources of the entity
2) Claims against the entity
3) "How efficiently and effectively the entity's management and governing board have discharges their responsibilities to use the entity's resources"
Name two groups that are not considered by FASB to be primary users of general-purpose financial reports
MGMT and Regulators
is the process of formally recording or incorporating an item into the financial statements of an entity as an asset, liability, revenue, expense, or the like
Process of including additional supplemental information.
Notes to FS
Process of associating numerical amounts with the elements.
Net realizable value
Present value of future cash flows
Process of admitting information into the basic financial statements
FASB ASC 450-20-25-2
A loss contingency is accrued only if a loss is probable and the amount can reasonably be estimated.
FASB ASC 450-20-20
an existing condition, situation, or set of circumstances involving uncertainty as to a possible gain or loss to an entity that will ultimately be resolved when one or more future events occur or fail to occur.
When is a liability accrued?
1. Probable and 2. reasonably estimated, if only one..then disclosure
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