COMPREHENSIVE ACCOUNTING PRINCIPLES
AND FINANCIAL STATEMENTS OVERVIEW
1. Accounting
*Answer√√ The process of identifying, measuring, recording, and communicating financial information to
help users make decisions
2. Separate Entity Assumption
*Answer√√ Business transactions are separate from owner's personal transactions
3. Going Concern Assumption
*Answer√√ The business will continue operating indefinitely
4. Monetary Unit Assumption
*Answer√√ Only monetary transactions are recorded; assumes stable currency
5. Time Period Assumption
*Answer√√ Business activities can be divided into time periods for reporting
6. GAAP
*Answer√√ Generally Accepted Accounting Principles; common accounting rules used in the US
7. FASB
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, *Answer√√ Financial Accounting Standards Board; establishes US accounting standards
8. Materiality Concept
*Answer√√ Information is material if its omission could influence economic decisions
9. Basic Accounting Equation
*Answer√√ Assets = Liabilities + Stockholders' Equity
10. Assets
*Answer√√ Resources owned by the company with future economic value
11. Current Assets
*Answer√√ Assets converted to cash within one year or operating cycle (examples: Cash, Accounts
Receivable, Inventory)
12. Cash
*Answer√√ Currency, coins, and checking accounts
13. Cash Equivalents
*Answer√√ Highly liquid investments maturing within 3 months
14. Tangible Assets
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, *Answer√√ Physical assets like equipment, buildings, and land
15. Liabilities
*Answer√√ Obligations the company owes to others
16. Current Liabilities
*Answer√√ Obligations due within one year (examples: Accounts Payable, Accrued Liabilities, Unearned
Revenue)
17. Long-Term Liabilities
*Answer√√ Obligations due beyond one year (examples: bonds, mortgages)
18. Accrued Liabilities
*Answer√√ Expenses incurred but not yet paid
19. Contingent Liability
*Answer√√ A potential liability that depends on a future event
20. Stockholders' Equity
*Answer√√ Owner's residual interest in the company
21. Common Stock
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AND FINANCIAL STATEMENTS OVERVIEW
1. Accounting
*Answer√√ The process of identifying, measuring, recording, and communicating financial information to
help users make decisions
2. Separate Entity Assumption
*Answer√√ Business transactions are separate from owner's personal transactions
3. Going Concern Assumption
*Answer√√ The business will continue operating indefinitely
4. Monetary Unit Assumption
*Answer√√ Only monetary transactions are recorded; assumes stable currency
5. Time Period Assumption
*Answer√√ Business activities can be divided into time periods for reporting
6. GAAP
*Answer√√ Generally Accepted Accounting Principles; common accounting rules used in the US
7. FASB
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, *Answer√√ Financial Accounting Standards Board; establishes US accounting standards
8. Materiality Concept
*Answer√√ Information is material if its omission could influence economic decisions
9. Basic Accounting Equation
*Answer√√ Assets = Liabilities + Stockholders' Equity
10. Assets
*Answer√√ Resources owned by the company with future economic value
11. Current Assets
*Answer√√ Assets converted to cash within one year or operating cycle (examples: Cash, Accounts
Receivable, Inventory)
12. Cash
*Answer√√ Currency, coins, and checking accounts
13. Cash Equivalents
*Answer√√ Highly liquid investments maturing within 3 months
14. Tangible Assets
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, *Answer√√ Physical assets like equipment, buildings, and land
15. Liabilities
*Answer√√ Obligations the company owes to others
16. Current Liabilities
*Answer√√ Obligations due within one year (examples: Accounts Payable, Accrued Liabilities, Unearned
Revenue)
17. Long-Term Liabilities
*Answer√√ Obligations due beyond one year (examples: bonds, mortgages)
18. Accrued Liabilities
*Answer√√ Expenses incurred but not yet paid
19. Contingent Liability
*Answer√√ A potential liability that depends on a future event
20. Stockholders' Equity
*Answer√√ Owner's residual interest in the company
21. Common Stock
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