Horngren’s Accounting Chapter 2 Vocabulary

monetary unit – Requires that only those things that can be expressed in money are included in the accounting records.
Comparability – Ability to compare the accounting information of different companies because they use the same accounting principles
blank statement – A report of deposits, withdrawals, and bank balances sent to a depositor by a bank.
Working Capital – Is the dollar difference between total current assets and total current liabilities.
Cash Surplus – An increase in a positive bank balance or a decrease in bank overdraft. (more cash receipts than cash payments)
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors – * Refers to accounting PRINCIPLES (eg. consistency, gc, accruals), BASES (methods for applying principles eg. use of historic cost or revaluation) and POLICIES (bases followed by a company eg. method of dep)
* Accounting policies must be applied consistently for similar transactions, changes may only occur when:
* Another IAS requires it, or;
* It will lead to more accurate/reliable information
* Changes must then be altered for previous FS

* ERRORS (numerical mistakes, mistakes in applying policies, oversignhts/misinterpretations of facts, fraud) – must be corrected if they are material

Surgery is an effective method of treating cancer when
Income Statement – a report of the revenue, expenses, and net income or net loss for an accounting period.
revenue – An increase in owners equity resulting from the operation of a business
*assets* – The resources owned by a business.
Board of directors – A group elected by the stockholders to set policy for a corporation and to appoint its officers.
Surgery is аn effective methоd оf treаting cаncer when
5. Financial accounting:
A. Provides information primarily for external decision makers.
B. Provides information primarily for a company's employees.
C. Provides information primarily for the use of managers of the company.
D. Is primarily used to compute a company's tax obligation. – A. Provides information primarily for external decision makers.

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