Chapter 01 Fundamental Accounting Principles

Sole Proprietor – One owner/Sole trader fully liable for the business's debts (unlimited liability: personal assets can be sold to pay for the business's debts)
Generally Accepted Accounting Principles (GAAP) – Common standards that indicate how to report economic events.
transportation expense – expense
cash flow – Net cash by operations-dividends-expidentures
Creditors control – Total bussiness owes to to creditors
list the 3 types of well-known fraud – embezzlement
bad checks
bribes
Desir (JBFA, 2012) examines intra-industry information transfer in relation to dividend announcement. Define the concept of information transfer and enumerate three (3) other business events that could trigger intra-industry information transfer.
profit margin – net income divided by sales
Other controls – Bonding, rotation of duties, required periodic vacations.
Which of the following is a general limitation of "general purpose financial statements"?

A. General purpose financial statements may not be the most informative for a specific enterprise.

B. General purpose financial statements are comparable.

C. General purpose financial statements are assumed to present fairly the company's financial operations.

D.None of the above. – A. General purpose financial statements may not be the most informative for a specific enterprise

Financial Statements – Financial reports that summarize the financial condition and operations of a business
generally accepted accounting principles (GAAP) – set of accounting standards that have substantial authoritative support, that guide accounting professionals
Desir (JBFA, 2012) exаmines intrа-industry infоrmаtiоn transfer in relatiоn to dividend announcement. Define the concept of information transfer and enumerate three (3) other business events that could trigger intra-industry information transfer.
Historical Cost Principle – assets should be recorded at their actual cost
Costs that are difficult to change over the short run are always variable over the long run. – True
What are non- current assets comprised of? – 1) Fixed- Assets
2) Other Assets
the principal that expenses reported in same time as earned – matching principal
sequential processing – a processing pattern in which units pass
from one process to another in a set order.

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