ACCT chapter 2 a

What is Accounting?

Accounting is the conversion of complex economic phenomena into abstract representations.

What does Decision Usefulness refer to?

Decision Usefulness is the quality that makes information capable of making a difference in decisions made by users.

What does Faithful Representation mean?

Faithful Representation means financial reports accurately represent economic phenomena in words and numbers.

What is Relevance in information?

Relevance is the quality of information that makes it capable of influencing users' decisions.

What is the Separate Entity Assumption?

The Separate Entity Assumption states that business transactions are separate from the owners' transactions.

What does the Going Concern Assumption imply?

The Going Concern Assumption implies that a business will continue to operate into the foreseeable future.

What is the Monetary Unit Assumption?

The Monetary Unit Assumption states that information reported is in the national monetary unit.

What is the Mixed-Attribute Measurement Model?

The Mixed-Attribute Measurement Model is a principle that most balance sheet elements are recorded at historical cost, with some adjustments possible.

What is Historical Cost?

Historical Cost is the original monetary value of an asset at the time of purchase.

What are Assets?

Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions.

What are Liabilities?

Liabilities are probable future sacrifices of economic benefits arising from present obligations to transfer assets or provide services.

What is Stockholders' Equity?

Stockholders' Equity is the residual interest in the assets of the entity after subtracting liabilities.

What is Contributed Capital?

Contributed Capital is financing provided by owners through the issuance of stock.

What are Retained Earnings?

Retained Earnings are financing provided by business operations that is retained and reinvested in the business.

What are Accounts Receivable?

Accounts Receivable are amounts owed to a business by customers or others.

What are Accounts Payable?

Accounts Payable are amounts owed by a company to vendors or suppliers.

What is Unearned Revenue?

Unearned Revenue is a liability representing amounts received for goods or services to be delivered in the future.

What is Full Disclosure?

Full Disclosure is the principle that all relevant information must be disclosed in financial statements.

What is a 10-K?

A 10-K is a comprehensive report filed annually by public companies detailing financial performance.

What does U.S. GAAP stand for?

U.S. GAAP stands for Generally Accepted Accounting Principles used in the United States.

What is FASB?

FASB stands for the Financial Accounting Standards Board, the organization that establishes accounting standards in the U.S.

What is IASB?

IASB stands for the International Accounting Standards Board, which sets international accounting standards.

What is Financial Reporting?

Financial Reporting is the process of providing financial information about a reporting entity to external users.