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13 Cards in this Set

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What are the Qualitative Characteristics of Accounting?
1.Understandability
2. Usefulness. What are the characteristics of Usefulness?
Relevant & Reliable

Relevance indicates that information has a Predictive value, feedback value, Timeliness.

Reliability indicates the information is Neutral, Verifiable, and contains representational faithfulness.
What are the Objectives of Financial Reporting?
1. Provide Information useful for investment and credit decisions
2. Provide information useful for assessing cash flow prospects (Amount, timing, uncertainties)
3. Provide Information about the enterprise's resources, claims to those resources, and changes therein
What are the most authoritative sources of guidance in the Heirarchy of GAAP?
Statements of Financial Accounting Standards and Interpretations, APB Opinions, and Accounting Research Bulletins
What are the pervasive constraints to Financial Reporting?
Benefits outweigh the associate costs

Materiality
Revenue Recognition criteria
Revenue must be recognized when both earned (indicates the transfer of risk and that substantially all work has been completed) and realized or realizable.
What is the matching principle?
Expenses should be recorded in the same period as their related revenues
How is full disclosure achieved in financial reporting?
Through the notes to the financial statements which contain additional information considered important for achieving the objectives of financial reporting.
What is the principle of conservatism?
Conservatism governs that gains should be deferred until they are both earned and realized or realizable, not solely when cash has been received. However, probably losses should be recorded immediately as long as it is reasonably estimable.
Comprehensive income
All income to the entity excluding exchanges with owners.

Net Income

+/- Pension changes in the funded status
Unrealized gains and losses on AFS securities
Foreign currency translation adjustments
Effective portion of cash flow hedges
Changes in which balance sheet accounts result in revenues? expenses?
Revenues result from an increase in assets or a decrease in liabilities
Expenses result from an increase in liabilities or a decrease in assets
What is the essential quality of an asset?
An asset signifies that the item will provide future benefits and therefore to comply with the matching principle it must amortize these costs of future periods benefits.
Gross Concept
Amounts are recorded in their entirety. This applies to expenses and revenues which are recorded in whole and then netted together in order to find income from continuing operations.
Single Step Income Statement
Total Expenses are subtracted from