ACC100 - Topic 4

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  1. Summarising Events
    • Decide on the purpose the summary is to serve.
    • Select the aspects of each event which are related to that purpose.
    • Prepare a summary.
  2. Transactional Analysis
    Systematic technique used to classify, analyse and summarise a large number of transactions, presented in the form of the basic financial statements.
  3. Elements of Financial Statement
    • Assets
    • Liabilities
    • Owner's Equity
    • Income
    • Expenses
  4. Assets
    Resources owned or controlled by the entity for the purpose of providing economic benefits to that entity in the future.
  5. Equity
    Amounts that are owed by the business.
  6. Liabilities
    Represent future obligations or sacrifices and are usually settled using cash (to parties outside the business).
  7. Owner's Equity
    Represents the owner/s claim or net worth in the assets of the entity.
  8. Accounting Equation
    Assets = Liabilities + Owner's Equity
  9. Value In Use
    The value an item has for being used to generate other resources which have either some value in exchange or some value in use.
  10. Value In Exchange
    The value an item has in exchange for cash, another resource or for the cancellation of a debt.
  11. Liquidity
    The ability of an entity to convert assets into cash.
  12. Accounting Entity Aspect
    For accounting purposes, the viewpoint taken is always that of the entity being accounted for.
  13. Matching Process (Principle)
    The method of allocating a long-term expense over the period of its life.
  14. Depreciation
    The systematic allocation of the depreciable amount of an asset over its useful life.
  15. Reliability
    The information should faithfully represent, without bias or undue error, the transactions and events of the business.
  16. Relevance
    Helps the users to form opinions about past, present or future events, and/or it confirms or corrects their previous judgements about their decisions.
  17. Economic Resources Assumption
    Accountants are concerned with placing an economic value on the resources controlled by the entity.
  18. Money Measurement Assumption
    Suggests that accounting transactions will be expressed in monetary terms, in the unit of monetary measurement for the country in which the business is located.
  19. Accounting Period Assumption
    The life of an entity can be broken into periods for the purpose of providing timely information on the entity's performance and financial position.
  20. Continuity Assumption (Going-Concern)
    In the absence of evidence to the contrary, the entity is assumed to continue to operate for the foreseeable future.
  21. Capital Maintenance Assumption
    Profit can be recognised only after the value of the owner's equity at the beginning of the period has been maintained.
  22. Faithful Representation Assumption
    A strength of the historical cost accounting system.
  23. Verifiability Assumption
    Essentially similar measure's or conclusions would be reached if two or more qualified persons examined the same data.
  24. Conservatism Assumption
    Implies that when faced with uncertainty in dealing with transactions, accountants will generally take the more cautious approach.
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ACC100 - Topic 4
2015-03-22 06:38:31
ACC100 - Topic 4 (3)
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