Chapter 1
Economic entity assumption
Harbor's CEO purchased a yacht for personal use and charged it to the company
Income Statement
How did this year's sales figures compare with last year's sales figures
Balance Sheet
How much does the company owe its suppliers in total?
Balance Sheet
How much in borrowings does the company currently owe?
Consistency
The ability to compare and contrast the financial activities of the same company over a period of time
Retained Earnings
Equity generated from profitable operations and retained in the business
Time period assumption
Harbor added four additional weeks to its fiscal year so that it could make its income look stronger. Past years were 52 weeks
Balance Sheet
Financial statement that reports assets, liabilities, and equity
Cost Principle
Inventory with a cost of $186,400 is reported at its market value of $235,600
Matching principle
Matching revenues and expenses
Revenues exceed expenses
Net income is created in a time period when:
Revenue recognition principle
Revenues are recorded when they are earned
Understandability
The ability of accounting information to be comprehensible to those who have a reasonable understanding of business and are willing to study the information with reasonable diligence
Comparability
The ability to compare and contrast the financial activities of different companies
Relevance
The capacity to affect business decisions
Realiability
The dependability of accounting information
The income statement and the balance sheet
The statement of retained earnings links which two financial statements?
Materiality
The threshold over which an item begins to affect decision making
Conservatism
The way in which the accountants deal with uncertanty
Understandability, relevance, consistency
What are the 3 qualitative characteristics of accounting?
Statement of cash flows
What financial statement is the Income Activities on?
Income Statement
What was the company's total interest cost last year?
Going concern
Which assumption states that an economic entity will continue its operations indefinitely?
Income statement
Which financial statement reports revenues and expenses?
Developing economic information
Which of the following is not included in the definition of accounting?
Revenues recognition principle
revenues of 25,000 earned in the prior year were recorded in the current year
