Accounting Chapter 2 Vocabulary

  1. Accrual - basis accounting (p. 66)
    Transactions that change a company's financial statements are recorded in the periods in which the events occur.
  2. Classified balance sheet (p.48) 
    A balance sheet that contains a number of standard classifications and sections.
  3. Comparability (p.65)
    Ability to compare the accounting information of different companies because they use the same accounting principles
  4. Consistency (p.65) 
    Use of the same accounting principles and methods from year to year within a company
  5. Cost constraints (p.67)
    Constraint of determining whether the cost that companies will incur to provide the information will outweigh the benefit that financial statement users will gain from having the information available
  6. Cost Principle (p.67)
    An accounting principle that states that companies should record assets at there cost.
  7. Current assets (p.49)
    Cash and other resources that companies reasonably expect to convert to cash or use up within one year or the operating cycle, whichever is longer.
  8. Current liabilities (p.52)
    Obligations that a company expects to pay within the next year or operating cycle
  9. Current ratio (p.59)
    A measure used to evaluate a company's liquidity and short - term debt paying ability; computed as current assets divided by current liabilities
  10. Debt to tottal assets ratio
Card Set
Accounting Chapter 2 Vocabulary