GAAP - Answer concepts and rules that govern financial accounting, aims to make information relevant, reliable, and comparable
SEC - Answer securities and exchange commission, a government agency, that oversees proper use of GAAP
FASB - Answer financial accounting standards board, a ...
Accounting Exam 1 Chapter 1-3 Prep
Questions With Guaranteed Pass
Solutions.
GAAP - Answer concepts and rules that govern financial accounting, aims to make information relevant,
reliable, and comparable
SEC - Answer securities and exchange commission, a government agency, that oversees proper use of
GAAP
FASB - Answer financial accounting standards board, a private sector group that sets both broad and
specific principles
IASB - Answer international accounting standards board, an independent group (consisting of
individuals from many countries) that issue IFRS (international financial reporting standards)
Measurement (cost) Principle - Answer accounting information is based on actual cost (cash or equal-
to-cash basis)
Revenue Recognition Principle - Answer provides guidance on when a company must recognize
revenue
1) revenue is recognized when earned
2) proceeds from selling products and services need not be in cash
3) revenue is measured by the cash received plus the cash value of any other items received
Matching (expense recognition) Principle - Answer prescribes that a company record the expenses it
incurred to generate the revenue reported
Full Disclosure Principle - Answer prescribes that a company report the details behind financial
statements that would impact users' decisions
, Going-Concern Assumption - Answer accounting information reflects a presumption that the business
will continue operating instead of being closed or sold
Monetary Unit Assumption - Answer transactions and events can be expressed in monetary unites
Time Period Assumption - Answer presumes that the life of a company can be divided into time periods
Business Entity Assumption - Answer a business is accounted for separately from other business
entities, including its owner
Income Statement - Answer a company's revenues and expenses along with the resulting net income
or loss over a period of time due to earnings activities
-revenues
-expenses
Statement of Retained Earnings - Answer explains changes in equity from net income or loss and from
any dividends over a period of time
Balance Sheet - Answer describes a company's financial position at a point in time
-assets
-liabilities
-equity
Statement of Cash Flows - Answer identifies cash inflows (receipts) and cash outflows (payments) over
a period of time
-operating activities (used up in short term)
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