Definition

Term
Information is useful in predicting the
Predictive Value
future.

Term Definition

Relevance Pertinent to the decision at hand.

Definition
Term
Information is available prior to the
Timeliness
decision.

Definition
Term
Decreases in equity resulting from transfers to
Distribution to owners
owners.

Term Definition

Feedback Value Information confirms expectations.

Term Definition

Reliability Along with relevance, a primary decision-

specific quality.

Definition
Term
Results if an asset is sold for more than
Gain
its book value.

Definition
Term
Agreement between a measure and the
Representational Faithfulness
phenomenon it purports to represent.

Term Definition

Comprehensive Income The change in equity from nonowner

transactions.

Definition
Term
Concerns the relative size of an item and
Materiality
its effect on decisions.

Definition
Term
Important for making interfirm
Comparabilty
comparisons.

Definition
Term
Accounting information should not favor a
Neutrality
particular group.

Definition
Term
The process of admitting information into
Recognition
financial statements.

Definition
Term
Applying the same accounting practices
Consistency
over time.

Definition
Term
Requires consideration of the costs and
Cost Effectiveness
value of information.

Definition
Term
Implies consensus among different
Verifiability
measurers.
 Definition
Term
Record expenses in the period the related
Matching Priniciple
revenue  is recognized.

Definition
Term
The life of an enterprise can be divided
Periodicity
into artificial time periods.

Definition
Term
The original transaction value upon
Historical Cost Principle
acquisition.

Definition
Term
Criteria usually satisfied at point of
Realization Principle
sale.

Term Definition

Going Concern Assumption The entity will continue indefinitely.

Term Definition

Monetary Unit Assumption A common denominator is the dollar.

Definition
Term
The enterprise is separate from its owners
Economic Entity Assumption
and other entities.

Definition
Term
All information that could affect
Full-disclosure Principle
decisions should be reported.

Definition
Term Not a qualitative characteristic, but a
Conservatism practical justification for some
accounting choices.

Definition
Term
Used to identify and process external
Source Documents
transactions.

Definition
Term
Determine the dual effect on the
Transaction Analysis
accounting equation.

Definition
Term
Record of the dual effect of a transaction
Journal
in debit/creidt form.

Definition
Term Transferring balances from the journal to the
Posting ledger.

Definition
Term
List of accounts and their balances after
Unadjusted Trial Balance
recording adjusting entries.

Term Definition

Cash Equivalent One-month U.S. Treasury bill.

Term Definition
 Internal events recorded at the end of a
Adjusting Entries
reporting period.

Definition
Term
List of accounts and their balances after
Adjusted Trial Balance
recording adjusting entries.

Definition
Term
Primary means of disseminating information
Financial Statements
to the extermal decision makers.

Definition
Term
To zero out the owners' equity temporary
Closing Entries
accounts.

Definition
Term
List of accounts and their balances after
Post-closing Trial Balance
recording closing entries.

Definition
Term
A means of organizing information: not
Worksheet
part of the formal accounting system.

Definition
Term
An organized array of assets,liabilities
Balance Sheet
and equity.

Definition
Term Relates to the amount of time before an
Liquidity asset is converted to cash or a libility
is paid.

Term Definition
Working Capital Current assets minus current liabilities

Definition
Term
Occurs after the fiscal year-end but
Subsequent Events
before the statements are issued.

Definition
Term
The statements are presented fairly in
Unqualified Opinion
conformity with GAAP.

Definition
Term
Recorded when an expense is incurred but
Accrued Liabilities
not yet paid.