ACCTING 1002 Lecture Notes - Lecture 4: Financial Accounting, Cash Flow Statement, Tax Accounting In The United States

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OC4629958

25 Jan 2023

School

University of Adelaide

Department

ACCTING - Accounting

Course

ACCTING 1002

Professor

Nurmalisa Chi Alie

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Document Summary

Accounting is the process of identifying, measuring, and communicating financial information to permit informed judgements and decisions. Relevance- the capacity of accounting information to make a difference in decisions. Accounting information should have the capacity to affect decisions. Accounting information should contain predictions about future performance or feedback on past predictions. Materiality- the threshold at which a financial item begins to affect decision making. When an amount is small normal accounting procedures are not always followed. Faithful representations- financial information that is presented in a way that is complete, neutral, and free from error. It should faithfully represent the phenomena that it purports to represent. In an attempt to provide complete information, companies provide additional notes to the financial statements. Financial reports represent economic phenomena in words and numbers. Prudence- when uncertainty exists, accounting information should present the least optimistic alternative. An entity should choose counting techniques that guard against overstating revenues or assets.

Related Questions

19. What of the following is not consistent with the primary purpose of financial accounting? A. To provide the SEC audited financial statements on a quarterly and annual basis. B. To provide investors with relevant information to use in decision making. C. To provide financial institutions with information relevant to lending decisions. D. All of the above are consistent with the purpose of financial accounting.

The Financial Accounting Standards Board has developed a conceptualframework for financial accounting and reporting. The FASB hasissued seven Statements of Financial Accounting Concepts.

These statements set forth objectives and fundamentals that will bethe basis for developing financial accounting and reportingstandards. The objectives identify the goals and purposes offinancial reporting. The fundamentals are the underlying conceptsof financial accounting concepts that guide the selection oftransactions, events, and circumstances to be accounted for; theirrecognition and measurement; and the means of summarizing andcommunicating them to interested parties.

The purpose of Statement of Financial Accounting Concepts No. 2,"Qualitative Characteristics of Accounting Information," is toexamine the characteristics that make accounting informationuseful. The characteristics or qualities of information discussedin Concepts No. 2 are the ingredients that make information usefuland are the qualities to be sought when accounting choices aremade.

What is the most important quality for accounting information asidentified in Statement of Financial Accounting Concepts No. 2?Explain why it is the most important.

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Which ONE of the following statements is TRUE?

Accounting focuses on quantitative financial information.

The balance sheet reports the excess of a companyâs revenues over its expenses.

Accounting and bookkeeping are the same thing.

Managerial accounting information is provided to external users to aid in decision making.

ACCTING 1002 Lecture Notes - Lecture 4: Financial Accounting, Cash Flow Statement, Tax Accounting In The United States

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