Intermiediate Acc Chpt 1

Relevent Info Elements

Material, Confirmatory, Predictive, Comparable, Verifiable

Faithful Representation Elements

Complete, Neutral, Free from Error, Timely, Understandable

4 Assumptions of Accounting

Going Concern, Monetary unit, Periodicity, Seperate Economic Entity

Level 1 Fair Value

Obvervable input that reflect market quoted prices

Level 2 Fair Value

Inputs other than quoted price, like a corporate bond valued at risk or interest

Level 3 Fair Value

Unobservable inputs like data on cash flows

Principals of Accounting

1. Measurement principal (historic cost or fair value)

2. Revenue recognition

3. Expense Recongition

4. Full Disclosure

Four Qualitative characteristics related to both Relevance and faithfulness

comparability, verifiability, timeliness, understandability

Declares and pays cash dividends to owners

Distribution to owners

Arises from peripheral or incidental transations

Gains and loses

Increases ownership interest

Investment by owners

Increases in net assets resources arising from a past transaction

comprehensive income

Increases in net assets in a period from nonowner sources

Revenue

Residual interest in assets of the enterprise after deducting its liabilties

equity

Permits the use of fair market value valuation in certain specific situations

market principal

Market value changes after a purchase are not recorded in the accounts

measurement principal

Product Expenses

Material, Labor, Overhead. Has Direct Relationship between cost and reveune, which is regonized in the period of reveune.

Period Cost

Sales, Administrative, no direct relationship between cost and revenue

FASB Due process

1. Topic Identified, R&Analysis for pros and cons, public heaing on standard, exposure draft, accountnig standards update.