Characteristics of Accounting

• Required
  • Relevance
  • Faithful Representation
• Nice to have
  • Understandability
  • Comparability
  • Verifiability
  • Timeliness

Assumptions of Measuring and Reporting

• 3 Assumptions
  • Separate Entity (business separate from owner)
  • Continuity/Going concern - assume to continue operating
  • Stable Monetary Unit
• 1 Principle
  • Historical Cost - Assets are recorded at the value the company originally acquired them for

Classified Something

Current vs. Non-current assets

• Current Assets

  • Assets that will be used or turned into cash in a year or less
  • Cash
  • Inventories
  • Short-Term Investments

• Non-Current Liabilities

  • Liabilities that will be paid for or settled in greater than one year

• Classified Statements of Financial Position

  • Headings for each subsection

• Ordered by liquidity (most to least)

T-Accounts

• Instead of rows for each transaction, have one T-Account for each section (i.e. cash, AR) with each debit/credit change