Intermediate accounting chapter 2 assesment

Describe the FASB's efforts to construct a conceptual framework.

Conservatism Constraint When in doubt, choose the solution that will be least likely to overstate net income. Revenue recognition principle: A company generally recognizes revenue when a realized or realizable and b earned. Industry Practices The peculiar nature of some industries and business concerns can require departure from basic theory. Describe the usefulness of a conceptual framework. Periodicity Comparability Information that is measured and reported in a similar manner for different companies is considered comparable it alloiws users to identify the real similarities and fdifferences in economic events between companies. Materiality: Sound and acceptable standards should be followed if the amount involved is significant when compared with the other revenues and expenses, assets and liabilities, or net income of the company. In addition, measurement and recognition concepts are developed. Conservatism: When in doubt. Difficulty is the costs and benefits aren't always apparent or measurable. If it does it must be disclosed. This is important becase depriciation and amortization policies are justifiable and appropriate only if we assume some permanence to the company. Consistency When a company applies the same accounting treatment to similar events, from period to period, they show consistent use of accounting standards. Revenue recognition 3. A company keeps its activity separate from its owners and any other buysiness unit.

Conservatism: When in doubt. A company keeps its activity separate from its owners and any other buysiness unit. These concept statements procide the basis for the conceptual framework.

intermediate accounting chapter 2 quizlet

Explain the application of the basic principles of accounting. Useful to those making investment and credit decisions who have a reasonable understanding of business activities.

Earned revenue Revneues are considered earned when the company substantially accomplishes what it must do to be entitled to the benefits represented by the revenues. Economic entity: the activity of a company can be kept separate and distinct from its owners and any other business unit.

Related documents. Going concern: The company will have a long life.

intermediate accounting chapter 2 exercise solutions

Materiality An item is material if it makes a differerence. Periodicity Comparability Information that is measured and reported in a similar manner for different companies is considered comparable it alloiws users to identify the real similarities and fdifferences in economic events between companies.

Fair Value Principle When you report the price that would be recieved to sell an asset or paid to transfer a liability in an orderly transaction between market participants at hte measurement date on the financial statemnets.

Elements, basic Assets, liabilities, equity, investments by owners, distributions to owners, comprehensive income, revenues, expenses, gains, losses. These concept statements procide the basis for the conceptual framework. Fair Value Principle When you report the price that would be recieved to sell an asset or paid to transfer a liability in an orderly transaction between market participants at hte measurement date on the financial statemnets. And about economic resources and the claims to and changes in them. Constraints cost benefit relationship and materiality cost-benefit relationship They must weigh the costs of providing the information against the benefits that can be derived from using it. This is important becase depriciation and amortization policies are justifiable and appropriate only if we assume some permanence to the company. Often the point of sale. Conservatism: When in doubt. Materiality An item is material if it makes a differerence. Monetary unit 4. Revenue recognition 3. It is thought to be reliable and is a veriafiable benchmark for measuring historical trends. Define the basic elements of financial statements. Full disclosure principle: Cmpanies generally provide information that is of sufficient importance to influence the judgement and decisions of an informed user.

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Chapter 2 Accounting