U.S. GAAP, Balance Sheet, Income Statement, Discontinued Operations, and Foreign Currency Transactions

Vocabulary practice flashcards covering U.S. GAAP fundamentals, balance sheet and income statement items, discontinued operations criteria, comprehensive income components, and foreign currency transaction principles.

Financial Accounting Standards Board (FASB)

The designated organization in the United States that establishes financial accounting concepts and standards, and issues U.S. GAAP for issuers and non-issuer nongovernmental entities.

Accounting Standards Codification

The single most authoritative source of U.S. GAAP for issuers and non-issuer nongovernmental entities.

Accounting Standards Update

The official document released by the FASB to amend the Accounting Standards Codification, requiring a majority vote of the FASB to be issued.

Assets

Resources owned or controlled by an entity that represent probable future economic benefits.

Liabilities

Claims against an entity that represent probable future sacrifices of economic benefits arising from present obligations.

Equity

The residual interest in the assets of an entity after subtracting its liabilities, expressed as $\text{Equity} = \text{Assets} - \text{Liabilities}$.

Recognition

The process of formally recording an economic event in the financial statements.

Accrual

An accounting event in which the expected future cash receipt or payment occurs after the related revenue or expense is recorded.

Deferral

An accounting event in which the cash receipt or payment occurs before the related revenue or expense is recorded.

Net Realizable Value

A measurement attribute equal to the estimated selling price of an asset less any expected disposal costs.

Current Assets

Resources that are reasonably expected to be realized in cash, sold, or consumed during the longer of one year or the normal operating cycle of the business.

Trading Securities

Debt or equity investments held for short-term trading that are always classified as current assets and never as noncurrent assets.

Current Liabilities

Obligations that are typically expected to be paid or settled within one year or the operating cycle, whichever is longer.

Deferred Tax Liability

A liability balance representing future tax obligations that is always classified as a noncurrent liability on the balance sheet.

Single-Step Income Statement

An income statement presentation that combines all revenues and gains into one total and all expenses and losses into another, excluding discontinued operations.

Net Sales

Gross revenues from sales minus sales returns and allowances and sales discounts.

Discontinued Operation

A component or group of components of an entity that has been disposed of or is classified as held for sale, representing a strategic shift that has or will have a major effect on the entity's financial results and ongoing operations.

Component of an Entity

A portion of an entity (such as a reportable segment, operating segment, reporting unit, subsidiary, or asset group) whose operations and cash flows can be clearly distinguished operationally and for financial reporting purposes.

Comprehensive Income

The total change in equity of a business enterprise during a period from non-owner sources, calculated as $\text{Comprehensive Income} = \text{Net Income} + \text{Other Comprehensive Income}$.

Other Comprehensive Income (OCI)

Revenues, expenses, gains, and losses that are excluded from net income under U.S. GAAP, consisting of unrealized gains/losses on AFS debt securities, cash flow hedge gains/losses, unrecognized prior service costs, foreign currency translation adjustments, and credit risk changes.

Accumulated Other Comprehensive Income (AOCI)

The cumulative total of other comprehensive income items over the lifetime of the entity, presented separately in the stockholders' equity section of the balance sheet.

Foreign Currency Transaction

A transaction such as buying, selling, borrowing, or lending denominated in a currency other than the entity's functional currency.

Spot Rate

The exchange rate for immediate delivery of currency on a specific date, used to record foreign currency transactions on transaction, balance sheet, and settlement dates.