Information should be appropriate for & have bearing on decisions to be made by the users
What is relevance
100
Assumes the business is separate from its owner(s)
What is separate economic entity (assumption)
100
Revenue is recognized when it is both earned & realized
What is revenue recognition (principle)
100
When you have 2 principles you can use, is the cost more than the benefit? which would be more beneficial?
What is cost-benefit test
100
Standard framework of guidelines for financial accounting followed by publicly traded companies
What is GAAP
200
The idea that financial statements are not prepared in a way to favor one group of users over another
What is neutrality (objectivity)
200
The business will continue to operate INDEFINITELY
What is going concern (assumption)
200
All info that may affect the user's interpretation of the profitability and financial position of a business must be disclosed in financial statements
What is full disclosure (principle)
200
Some industries have unusual tax laws or regulatory requirements & so have developed special accounting principles & procedures for their industry
What is industry practice
200
Formed to develop accounting standards that can be adopted throughout the world for publicly traded companies.
What is IASB
300
when indepenent measures obtain similar results
What is verifiability
300
Information that helps the statement user confirm fulfillment or nonfulfillment of prior expectations or decisions
What is feedback value
300
The information should be useful to decision makers, & be presented in a clear & understandable manner
What is usefulness & understandability
300
An entity uses the same accounting treatment for similar events & data from period to period
What is consistency
300
Licenses & regulates stock exchanges & is the legal rule making body for the public sector (government). Helps prevent corporate abuse
What is SEC
400
Information is relevant & will help statement users in making predictions about the meaning & ultimate outcome of events
What is predictive value
400
Expressing financial facts in monetary terms & assuming the value of money is stable
What is monetary unit assumption
400
Revenue must be matched against expired costs incurred in earning said revenue
What is matching (principle)
400
The significance of an item of financial data in relation to other financial data (in a particular situation)
What is materiality
400
Primary purpose is to develop GAAP within the U.S. , it is the representative of the private sector. Develops and issues SFAS
What is FASB
500
The concept that data shown in the financial reports reflect what really happened
What is representational faithfulness
500
The activities of the business can be divided into time periods with revenue & expenses being assigned to those periods
What is periodicity of income (assumption)
500
Assets recorded at their cost at the time they are acquired
What is historical cost basis (principle)
500
If there are 0 or 2+ acceptable treatments of a transaction, choose the one that would result in the least possible recorded income or largest reported loss
What is conservatism
500
created by Sarbanes-Oxley Act, the purpose of this company is to oversee the CPA firms auditing publicly held companies. It is composed of 5 members, & 2 MUST be CPA's