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Flashcards in Chapter 1 Deck (37)
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1

WHAT ARE THE QUALITATIVE CHARACTERISTICS?

RELEVANCE: PREDICTIVE VALUE, CONFIRMATORY VALUE, MATERIALITY
FAITHFUL REPRESENTATION: COMPLETENESS, NEUTRALITY, FREE FROM ERRO

2

EXPLAIN THE RELEVANCE QUALITATIVE CHARACTERISTIC?

Capable of making a difference in decision of users via predictive value, confirmatory value and materiality.

3

EXPLAIN THE PREDICTIVE VALUE?

If it can be used as an input to processes employed by users to predict outcomes. (like sales from the previous 5 years to predict this year's sales. Useful in predictions.

4

EXPLAIN THE CONFIRMATORY VALUE?

Provides feedback (confirms or changes) about previous evaluations. (like the amount of sales reported this year is used to asses what we expected sales to be this year. )

5

EXPLAIN MATERIALITY?

Information is material if omitting it or misstating it could influence decisions that users maker (like companies not reporting revenue on segments). Capable of Influencing decisions.

6

EXPLAIN THE FAITHFUL REPRESENTION QUALITIVE CHARACTERISTIC?

Represents economic phenomena in words and numbers via completeness, neutrality and free from error.

7

EXPLAIN COMPLETENESS?

This includes all information necessary for a user to understand the phenomenon being depicted. includes information necessary for understanding.

8

EXPLAIN NEUTRALITY?

Depiction is without bias. Free from bias.

9

EXPLAIN FREE FROM ERROR?

NO errors or omissions. Generally accurate.

10

WHAT ARE THE ENCHANCING CHARACTERISTICS?

COMPARABILITY, VERIFIABILITY, TIMELINESS, UNDERSTANBILITY

11

EXPLAIN COMPARABILITY

Can be compared with similar information about other entities and with similar information about the same entity. Helps users decisions involve choosing between alternatives.

12

EXPLAIN VERIFIABILITY

Information faithfully represents the economic phenomena it purports to represent. This means that different knowledgeable and independent observers could reach consensus. Confirmable

13

EXPLAIN TIMELINESS

In time to be capable of influencing their decisions. Reported soon enough to make a difference.

14

EXPLAIN UNDERSTANBILITY

Presented clearly and concisely

15

EXPLAIN EFFECTIVENESS CONSTRAINT

Costs of reporting are justified by the benefits of reporting that information.

16

WHAT FINANCIAL STATEMENT ARE POINT IN TIME ELEMENTS?

Balance sheet. Assets, liabilities, equity

17

EXPLAIN ASSETS?

Probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events.

18

EXPLAIN LIABILITIES?

Probable future sacrifices of economic benefits arising from present obligation of a particular entity to transfer assets or provide services to other entities in the future as a result of past transaction or events.

19

EXPLAIN EQUITY?

Net assets is the residual interest in the assets of an entity that remains after deducting its liabilities.

20

WHAT IS THE FINANCIAL STATEMENT THAT IS PERIOD OF TIMES?

Stockholders equity statements, Income Statements

21

EXPLAIN INVESTMENTS BY OWNERS?

Increases in equity of a particular business enterprise resulting from transfers to it from other entities of something valuable to obtain or increase ownership interests in it. (Stockholders Equity Statement)

22

EXPLAIN DISTRIBUTION TO OWNERS?

Decreases in equity of a particular business enterprise resulting from transferring assets, rendering service, or incurring liabilities by the enterprise to owners. (Stockholders Equity Statement)

23

EXPLAIN COMPREHENSIVE INCOME?

A change in equity of a business enterprise during a period from transaction and other events and circumstances from nonowners sources. (Comprehensive Income Statement)

24

EXPLAIN REVENUES?

Inflows or other enhancements of assets of an entity or settlements of its liabilities from delivering or producing goods, rendering service or other activities that constitute the entity’s ongoing major or central operations. (Income Statement)

25

EXPLAIN EXPENSES?

Outflows or other using up of assets or incurrences of liabilities from delivering or producing goods, rendering services or carrying out other activities that constitute the entity’s ongoing major or central operations. (Income Statement)

26

EXPLAIN GAIN?

Increases in equity from peripheral or incidental transactions of an entity and from all other transactions and other events and circumstances affecting the entity except those that result from revenues or investments by owners. (Income Statement)

27

EXPLAIN LOSSES?

Decreases in equity from peripheral or incidental transactions of an entity and from all transactions and other events and circumstances affecting the entity except those that result from expenses or distribution to owners. (Income Statement)

28

WHAT ARE THE FOUR KEY ACCOUNTING ASSUMPTIONS?

Economic Entity, Going Concern, Periodicity, Monetary Unit

29

WHAT IS THE ECONOMIC ENTITY?

Specific economic activities are considered an identifiable accounting unit. Entities are separate from its owners and from other entities. Specific activities are identified with an accounting unit.

30

WHAT IS THE GOING CONCERN?

Entity expected to continue operations for the foreseeable future. Entity expected to carry out contemplated operations and commitments.