Prepayments – expenses paid in cash and recorded as assets before they are used or consumed
limitations of the income statement – things cannot be measured reliably
different accounting methods
income measurement involves judgement
23.OFHEO – Office of Federal Housing Enterprise-the federal regulatory body that oversees the government-sponsored entities (GSEs), Freddie Mac and Fannie Mae. Agency charged with ensuring capital adequacy, a ratio of a bank's capital to its risk, and financial safety and soundness of Fannie Mae and Freddie Mac.
Current liabilities – Must be paid in the next year or operating cycle, whichever is longer
Materiality – companies must use GAAP for all significant transactions that will affect an investor's decisions, but insignificant transactions may be treated in alternative ways.
Special journal – A journal used to record only one kind of transaction.
Annual income is a _______ level of measurement
Note Payable. – A written promise to pay a creditor a certain amount in the future.
Assets – Resources owned by a firm
payee – the person or business to whom a check is written
Cash – …Is a Debit balance account.
Conceptual Framework – in accounting is important because rule-making should be built on and relate to an established body of concepts. The benefits of a soundly developed conceptual framework are as follows: (a) it should be easier to issue a coherent set of standards and rules; and (b) practical problems should be more quickly solved.
T-account – A visual representation of a ledger account. The T-account is a tool used to analyze transactions.
Annuаl incоme is а _______ level оf meаsurement
Temporary Accounts – "Nominal" are Income Statement accounts that are closed to Retained earnings at the end of the accounting period.

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