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14 Cards in this Set

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What is meant by the term operating cycle?
The average time required to go from cash to cash in producing revenues.
What accounting constraint refers to the tendency of accountants to resolve uncertainty in a way least likely to overstate assets and net income?
Conservatism
Generally Accepted Accounting Principles (GAAP) are?
A set of standards and rules that are recognized as a general guide for financial reporting.
What organization issues US accounting standards?
Financial Accounting Standards Board (FASB)
How are current assets classified on the Balance Sheet?
Current assets; long-term investments; property, plant and equipment; and intangible assets
Describe Comparability
Ability to compare the accounting information of different companies because they use the same accounting principles
Describe Consistency
Use of the same accounting pronciples and methods from year to year within a company
What is the cost principle?
An accounting pronciple that states that companies should record assets at their cost.
What is Earnings per Share (EPS)? How is it computed?
A measure of the net income earned on each share of common stock; computed as net income minus preferred stock dividends divided by the average number of common shares outstanding during the year.
Who are the two most important user of accounting information?
investors and creditors who provide resources to a company
What is a Balance Sheet?
Balance Sheet (Statement of Financial Position) that presents a company's financial position (measured by its assets, liabilities, and owners' equity) at a specific point in time.
What is an Income Statement?
(Statement of Operations or Statement of Earnings) that presents a company's operating performance (revenues, expenses, and net income) over a specific period of time.
What is a statement of Cash Flows?
presents a company's cash receipts (sources of cash) and cash disbursements (uses of cash) over a specific period of time.
What report shows the changes in stockholders' equity?
Most companies present changes in stockholders’ equity through the Statement of Stockholders’ Equity as a fourth financial statement; changes in retained earnings are presented within this statement.