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14 Cards in this Set
- Front
- Back
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What is meant by the term operating cycle?
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The average time required to go from cash to cash in producing revenues.
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What accounting constraint refers to the tendency of accountants to resolve uncertainty in a way least likely to overstate assets and net income?
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Conservatism
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Generally Accepted Accounting Principles (GAAP) are?
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A set of standards and rules that are recognized as a general guide for financial reporting.
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What organization issues US accounting standards?
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Financial Accounting Standards Board (FASB)
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How are current assets classified on the Balance Sheet?
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Current assets; long-term investments; property, plant and equipment; and intangible assets
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Describe Comparability
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Ability to compare the accounting information of different companies because they use the same accounting principles
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Describe Consistency
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Use of the same accounting pronciples and methods from year to year within a company
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What is the cost principle?
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An accounting pronciple that states that companies should record assets at their cost.
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What is Earnings per Share (EPS)? How is it computed?
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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.
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Who are the two most important user of accounting information?
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investors and creditors who provide resources to a company
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What is a Balance Sheet?
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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.
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What is an Income Statement?
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(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.
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What is a statement of Cash Flows?
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presents a company's cash receipts (sources of cash) and cash disbursements (uses of cash) over a specific period of time.
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What report shows the changes in stockholders' equity?
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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.
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