Acc 301 Test 1 Terms

Predictive Value

Information is useful in predicting the future.

Relevance

Pertinent to the decision on hand.

Timeliness

Information is available prior to the decision.

Distribution to owners

Decreases in equity resulting from tranfers to owners.

Confirmatory Value

Information confirms expectations.

Understandability

users understand the information in the context of the decision being made.

Gain

Increase in equity not resulting from revenues or investments by owners.

Faithful Representation

Agreement between a measure and the phenomenon to purports to represent.

Comprehensive Income

The change in Equity from nonowner transactions.

Materiality

Concerns the relative size of an item and its effect on a decision.

Comparability

Important in making inter-firm comparisons.

Nuetrality

The absence of bias.

Recognition

The process of admitting information into financial statements.

Consistency

Applying the same accounting practices over time.

Cost Effectiveness

Requires consideration of the costs and value of information.

Verifiability

Implies consensus among different measures.

Expense Recognition

Record expenses in the period the related revenue is recognized.

Periodic assumption

The life of an enterprise can be divided into artificial time periods.

Historical Cost Principal

The original transaction value upon acquisition.

Revenue Recognition

Criteria usually satisfied for products at point of sale.

Going Concern

The entity will continue indefinitely.

Monetary Unit

A common denominator in the dollar.

Economic Entity

The enterprise is separate from its owners and other entities.

Full Disclosure Principle

All information that could affect decisions should be reported.