GAAP
Materiality Constraint
prescribes that accounting for items that significantly impact financial statement and any inferences from them adhere strictly to GAAP
Revenue Recognition Principle
the principle that companies recognize revenue in the accounting period in which it is earned
Relevance
the relation of something to the matter at hand
Reliability
the trait of being dependable or reliable
Matching Principle
A GAAP principle that requires matching expenses incurred in an accounting period with the revenue earned in the same period
Governing Bodies
AICPA, FASB, SEC, GASB
Going Concern Assumption
Accounting information reflects a presumption that the business will continue operating instead of being closed or sold
Full Disclosure Principle
Accounting principle that dictates that companies disclose circumstances and events that make a difference to financial statement users.
Economic Business Entity Assumption
All of the business transactions should be separate from those of the owners
Securities
All of the investments, including stocks, bonds, mutual funds, options, and commodities, that are traded.
AICPA
American Institute of Certified Public Accountants - its the government body; requires continuing education; give the CPA exam
Cost Principle
An accounting principle that states that companies should record assets at their cost.
Monetary Unit Assumption
An assumption that requires that only those things that can be expressed in money are included in the accounting records.
Time Period Assumption
Assumes that the long life of a company can be broken down into shorter time periods, such as months, quarters and fiscal years.
FASB
Financial Accounting Standards Board, sets accounting standards in the U.S.
GAAP
Generally Accepted Accounting Principles; the set of accepted industry rules, practices and guidelines for financial accounting
GASB
Governmental Accounting Standards Board
IFRS
International Financial Reporting Standards
Conservatism Constraint
Principle that prescribes the less optimistic estimate when two estimates are about equally likely.
Recognition Concept
States that an item should be recognized in the financial statements when it can be defined, measured, relevant and reliable
Measurement Concept
States that every transaction is measured by the stated unit of measurement, such as the dollar.
Comparability
ability to compare the accounting information of different companies because they use the same accounting principles
SEC
an independent federal agency that oversees the exchange of securities to protect investors
Consistency
conforming from period to period with unchanging policies and procedures