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