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WALL STREET PREP ACCOUNTING STUDY GUIDE
FASB <<>>Financial Accounting Standards Board, which oversees GAAP through issuance of SFAS, oversight by the SEC
SFAS <<>>Standard Financial Accounting Statements, issued by the FASB
AA,P,C: Accounting Entity <<>>The assumption that a corporation is an entity separate from any person
AA,P,C: Going Concern <<>>The Assumption that a corporation will continue to exist for the foreseeable future
AA,P,C: Measurement & Units <<>>The principle that financial statements can only show the quantifiable assets or liabilities of a corporation
AA,P,C: Periodicity <<>>the principle that financial statements reflect a standard period of time, usually years or quarters
AA,P,C: Historical Cost <<>>The principle that resources and liabilities are recorded at their initial cost rather than a continuously updating value
AA,P,C: Revenue Recognition <<>>The principle that revenues are recorded when EARNED and MEASURABLE
AA,P,C: Matching <<>>The principle that costs must be recorded in the same period that revenues were generated
AA,P,C: Disclosure <<>>The principle that a corporation must reveal all relevant financial information
AA,P,C: Estimates and Judgement <<>>The constraint that estimates/predictions cannot always be accurate
AA,P,C: Materiality <<>>The constraint that one transaction may be deemed relevant for one company but not another, usually based on size
AA,P,C: Consistency <<>>The constraint that recording methods and assumptions may not always be the same over time
AA,P,C: Conservatism <<>>The constraint that assets are usually understated and liabilities are not understated, for example historical cost measurements
Income Statement <<>>depicts the revenues and expenses of a company over a given time period
Revenue <<>>proceeds from the goods or services offered for sale by a company
Cost of Goods Sold <<>>Represents the cost of manufacture or procurement for goods or services that generate revenue (cost of inventory, factory overhead, raw materials, direct labor costs, depreciation of fixed assets)
Gross Profit <<>>Revenue-Cost of Goods Sold, i.e. profit only after direct expenses have been calculated
Selling, General and Administrative Expenses <<>>costs not directly associated with manufacture or procurement of revenue driving goods or services
Research and Development Expenses <<>>costs associated with developing new products or procedures
Depreciation <<>>a portion of the expense incurred by purchasing revenue generating assets such as equipment. quantifies "wear and tear"
Intangible Assets and Goodwill <<>>nonphysical assets, including patents and trademarks that have been acquired
Accounts Payable <<>>liability that represents obligations for unpaid bills on goods or services
Accrued Expenses <<>>liability that has not been paid out yet, i.e. employee compensation, bonuses
Short Term Debt <<>>debt due within 12 months
Long Term Debt <<>>debt that isn't due for at least 12 months
Common Stock <<>>represents capital received through issuing shares of common stock
Retained Earnings <<>>the earnings that have not been paid out in the form of dividends
Treasury Stock <<>>bought back stock that has been taken out of circulation
Preferred Stock <<>>equity issued with special rights, takes priority over common stock
Double Entry Accounting <<>>the idea that every transaction is recorded as both a credit and debit
Debit <<>>Increases in Assets or decreases in equity or liability
Credit <<>>Decreases in assets or increases in liabilities or equities
Link between income statement and balance sheet <<>>retained earnings
Goodwill <<>>the amount by which the purchase price for a company exceeds its fair market value, representing the value of its brand name, reputation, employee morale, etc.
Capital Lease <<>>A lease that is counted as a liability with the corresponding asset as a PP&E
Operating Lease <<>>No asset or liability is recorded, payments are simply expensed on the income statement.
