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15 Cards in this Set

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transactional approach
company records its net assets at their historical cost and it does not record changes in the assets and liabitlites unless a transaction event or circumstance has occurred that provides reliable evidence of a change in value
Comprehensive Income
The change in equity of a company during a period from transactions other events or circumstances relating to nonowner sources. It includes all changes in equity during a period except those resulting from investments by ownders and distributions to owners.
Net Income=
Revenues-expenses+gains-losses
Revenues
Inflows of assets of a company or settlement of its liabilties during a period from delivering or producing goods rendering services or other activities that are the company's ongoing major or central operations.
Revenues are recognized when
realization has taken place
they have been earned
Intraperiod tax allocation
involves allocating a corporation’s total income tax expense for a period to the various components of its net income, retained earnings, and other comprehensive income
Interperiod tax allocation
involves allocating a corporation’s income tax obligation as an expense to various accounting periods because of temporary (timing) differences between its taxable income and pretax financial income.
Comprehensive Income
1. Any unrealized increases (gains) or decreases (losses) in the market value of investments in available-for-sale securities.
2. Any change in the excess of its additional pension liability over unrecognized prior service costs.
3. Certain gains and losses on “derivative” financial instruments.
4. Any transaction adjustment from converting the financial statements of a company’s foreign operations into U. S. dollars.
Gains
Increases in the equity (net assets) of a company from a peripheral or incidental ranactions and all other events and circumstances during a period, ecspet those that result from revenues or investments by owners.
Income Statment Content
1. Income from continuing operations.
sales revenue
cost of goods sold
operating expenses
other items
Income tax expense related to cont ops
2. Results from discontinued items
Income loss from operations or discontinued segments(net of income taxes)
Gain (Loss) from disposals of discontinued segments net of income taxes
3. Extraordinary Items
4. cumulative effets of changes in accouting principles
5. net income
6. earning per share
The statement of cash flows helps users to assess--
The company’s ability to generate positive future cash flows.
The company’s ability to meet its obligations and pay dividends.
The company’s need for external financing.
The reasons for differences between the company’s net income and associated cash receipts and payments.
Both the cash and noncash aspects of the company’s investing and financing transactions.
The statement of cash flows includes three major sections.
(1) Net cash flow from operating activities.
(2) Cash flows from investing activities.
(3) Cash flows from financing activities.
A company may report its comprehensive income under three alternatives
1. on the face of its income statement
2. in a separate statement of comprehensive income
3. in its sttement of changes in stockholders' equity
Disposal Date
date of actual sale or abandonment.
When asset is changed to expense
If the benefits have been used up, the asset is changed to an expense.