int. Accounting

  1. representational faithfulnes
    a characteristic o reliable information, indicationg that a companie's accounting numbers and descriptions match what really excisted or happened
  2. conservatism
    the convention in accoutnting that dictates when in doubt, choose the solution that will least likely overstate assets or income. Properly applied provied reasonable guide in dificult situations , if no doubt excists there is no need to apply this constraint
  3. supplementary information
    information included in notes to financial statements, which includes details or amounts that different perspective from that adopted in the financial statements. It may be quantifiable information that is low in relevance and may include managments explenation of the financial information and its disccusion of the significance of the information
  4. period cost
    cost that attache to a specific accounting period. ie officer's salaries and other adminstrative expences. Companies charge off such period cost in the immediate period, even though benefits assosiated with these costs may occure in the future. Not included as inventory cost instead they are matched with reveneu of a specific time period and expense as incurred.
  5. fair value option
    the choice allowed by the FASB to use fair value in the finacial statement as the basis of meassurement for financial assests and liability. They are recorded at fair value at each reporting date, and unrealized holding gaines and losses are recorded as part of the net income
  6. product cost
    cost that attache to a specific product. ie materials, labor, overhead. COmpanies carry it into future periods if they recognized the product in subsequent periods
  7. neutrality
    one characteristic of reliable information, which inducates that the company can not select information to favor one set of intrested parties over an other. Unbiased information must be the overriding consideration
  8. verifiability
    a characteristic of reliable information indicating that similar results will occur when independent third parties measure using the same methods
  9. predictive value
    one charcteristic of relevant information, indicating that information must help users predict the ulitmate outcome of past, present, and future events
  10. elements, basic
    defenitions of the items that make up any theoretical structure. For accounting, the basic elements are the many terms with distinctive and specific meanings. There are 10 basic accounting elements: assets, liabilities, equity , gains and losses, investments by owners, distribution to owners, comprehensive income , reveneus, expenses. These terms consitute the basic language of business, and accounting
  11. economic entity assumtion
    an assumption that economic activity can be identified with a particular unit of accountability, by keeping an enterprise's economic activity separate and distinct from that of its owners and other business unit. The entity assumption refers to economic, rather than legal, entities
  12. assumtion
    one of the parts in the 3rd level conceptual framewrok; a concept that the accounting profession assumes as foundational for the financial accounting structure. There are 4 basic assumption economic entity, going concern, monetary unit, and periodicity
  13. reveneu recognition principle
    one of the basic principles of accounting, which dictates that companies recognize reveneu when it is realized or realizable and when it is earned. When assets are salable or interchangable in an active market at readily detirmenable prices without significantadditional cost and when the company substantially accomplishes what it must do to be entitled to the benefits represented by the reveneus. Generally, recognition at the time of sale provides a uniform and reasonable test
  14. industry practices
    peculiarites of some industries and business concerns that cause variations from basic accounting theory or practice.
  15. reliability
    one the qualitative characteristics of accounting information, which describes information that is verifiable, is a faithful representation, and is reasonable free of error and bias
  16. relevance
    one of the qualitative characteristics of accoutnign information, which describes information capable of making a differnce in a decision
  17. going concern assumption
    accountign assumption that a company will comtinue in operation for the foreseeable future
  18. realizable (reveneu)
    part of the 1st test of the revenue recognition principle, reveneus and realizable when assets received or held are readily convertible into cash or claims to cash
  19. full disclosure principle
    accounting principle that dictates that in deciding what information to report, companies follow the general practice of providing information that is of sufficient imporatance to influence the judgment and decisions of an informaed user. It recognizes that the nature and amount of information included in financial reports reflects a series of judgmental trade-offs betwn sufficient details that make a different to users, sufficent consideration to make the information understandable, and the cost benefits of providing the information
  20. matching principle
    accounting principle that dictates that efforts be matched with accomplishments whenever it is reasonable and practicable to do so. This linking of expense recognition to revenue recognition is popularyl expressed as, "let the expense follow the revenues"
  21. historical cost principle
    an accepted accounting principle that companies account for and report most assets and liabilities on the basis of acquisition price. It is verifiable and neutral and therefore contributes to reliability
  22. materiality
    an accounting constrain thats sais if an item would not make a differnece in a users decision making, the company need not disclose the item in its financial reporting
  23. fair value principle
    GAAP- based principle that calls for the use of fair value measurement in the financial statement
  24. objectives of financial reporting
    goals for financial accounting and reporting, established by the accounting profession, which are to provide information that is usefule in investment and credit decisions, useful in assesing cash flow prospects, and about companies resources, claims to resources, and changes in them
  25. comparabiliy
    one the qualitative characteristics of accountig information, which describes information that is measured and reported in a similar manner for different companies
  26. feedback value
    a characteristic of relevant information, indicating that information must help users confirm or correct prior expectations
  27. timeliness
    a characteristic of relevant information, indicationg that information should be available to decision makers before it loses its capacity to influence their decision
  28. realized (revenue)
    when assest recieve od held are converted into cash or clamies to cash
  29. earned (revenue)
    revenue is considered earned when the company substantially accomplishes what it must do to be entitled to the benefits represented by the reveneus. Generally, an objective test, such as a sale, indicates the point at which a company recognizes revenue and verifies the amount of revenue earned
  30. principles of accounting
    one of the parts of the 3rd level of conceptual fram work , which details recognition and measurement concepts. The accounting profession generally uses 4 baisc principles :measurement, revenue recognition, matching, and full disclosure
  31. decision usefulness
    approach that requiers that financial information be useful to investor and creditor decisions
  32. notes to financial statements
    a set of disclosures in a company's financial statements that further explain the items presented in the main bady of the statements. The additional information provided in the notes does not have to be quantifiable , nor does it need to qualify as an accounting element.
  33. periodicy (time) assumption
    accounting assumption that implies that a company can divide its economic activities into artificial time periods. These time periods vary, but most common are monthly, quarterly, and yearly
  34. monetary unit assumption
    accounting assumption that money is the common denominator of economic activity and provides an appropriate basis for accoutnting measurement analysis
  35. cost-benefit relationship
    an accounting constraint that requires that ine weigh the cost of providing financial information against the benefits that can be derived from using it. The constraint applies to informational requirement establishe by standard- setting bodies and governemtnal agencies as well as companies reporting fiancial information
  36. conceptual frame work
    for the accoutnign profession, a coherent system of objectives and fundamentals established by the FASB, which determine the nature, function, and limits of financial accounting and which lead to consistent accounting standards
  37. expence recognition principle
    accounting principle that dictates that the recognition of expenses is related to the net changes in assets and earning revenues, that is, "let the expenses follow the revenues"
  38. understandability
    a qualitative characteristic of accoutning that lets reasonably informaed users see its significance
  39. constraints
    one of the parts in the 3rd level of the conceptual framework, there are 2 main overriding factors that limit financial reporting: cost-benefit relationship, and materiality
  40. qualitative characteristics
    part of the 2nd level of the conceptual framework of accounting; the characteristics of accoutnting information distiguish better information for inferior information for decision-making purposes. The primary qualitative charcteristics are relevenace and reliability and the secondary are comparability and consistency
  41. consistency
    one of the qualitative characteristics of accounting information, which indicates that a company applied the same accounting treatment to simialr events from period to period. A company can change methods, but it must first demonstrate that the newly adopted method is preferable to the old and then must disclose in the financial statemnts that nature and effect of the accounting change
Card Set
int. Accounting
int. accounting (ALLY)