ACG Exam 1 Review
Matching Principle
A company records the expenses incurred to generate the revenues reported.
Full Disclosure Principle
A company reports details behind financial statements that would impact users' decisions.
Public Accountants
Accounting professionals who provide services to many clients.
Net income
Amount a business earns after paying all expenses and costs associated with its sales and revenues.
Tax Accounting
An accounting area that includes planning future transactions to minimize taxes paid.
Audit
An examination of an organization's accounting system and records that adds credibility to financial statements.
General accounting principle
Derived from long-used and generally accepted accounting practices.
Business entity assumption
Every business is accounted for separately from its owner or owners.
Going-concern assumption
Financial statements reflect the assumption that the business continues operating.
Cost Principle
Information is based on actual costs incurred in transactions.
Ethics
Principles that determine whether an action is right or wrong.
Revenue recognition principle
Revenue is recorded only when the earnings process is complete.
Specific accounting principle
Usually created by a pronouncement from an authoritative body.
Time Period Assumption
accounting concept that assumes that the economic life of the business can be divided into artificial time periods.
Monetary unit assumption
concept of accounting requiring that economic data be recorded in dollars. Money is both the common factor of all business transactions and the only feasible unit of measurement that can be used to achieve uniform financial data.
Generally Accepted Accounting Principle (GAAP)
concepts and rules financial accounting is governed by
Securities and Exchange Commission (SEC)
government agency that has the legal authority to set GAAP
Financial Accounting Standards Board (FASB)
private sector group that sets the rules and principles