Accrual Accounting Flashcards
Characteristics of Relevance
To be relevant, information about an item must have feedback value or predictive value (or both) for users and must be timely.
Increases in equity (net assets) from peripheral or incidental transactions of an entity and from all other transactions and other events and circumstances affecting the entity except those that result from revenues or investments by owners.
Gains
The process of converting noncash resources and rights into cash or claims to cash.
Realization
Enhancing qualitative characteristic of relevance and faithful representation
Comparibility
The process of formally recording an item in the financial statements of an entity after it has met existing criteria and been subject to cost-benefit constraints and materiality thresholds.
Recognition
All changes in net assets of an entity during a period except those resulting from investments by owners and distributions to owners.
Comprehensive Income
Inflows or other enhancements of assets of an entity or settlements of its liabilities from delivering or producing goods, rendering services, or other activities that constitute the entity’s ongoing operations.
Revenues
The amount of cash, or its equivalent, that could be obtained by selling an asset in orderly liquidation.
Current Market Value
The quality of information that helps users to increase the likelihood of correctly forecasting the outcome of past or present events.
Predictive Value
A performance measure concerned primarily with cash-to-cash cycles.
Earnings
Period of a current asset
An operating cycle or one year, whichever is longer.
How are equipment and short-term payables measured?
At historical cost/proceeds
How are securities available for sale and trading securities measured?
At current market value
How are A/R and warranty obligations measured?
At net realizable value or settlement rate
How are long term receivables and bonds payable in 10 years measured?
At the present value of future cash flows
