| A | B |
|---|
| GAAP | Generally Accepted Accounting Principles, The standards, conventions, and rules accountants follow in recording and summarizing transactions, and in the preparation of financial statements |
| AICPA | American Institute of Certified Public Accountants; the national professional organization of CPAs. |
| FASB | Financial Accounting Standards Board; develops GAAP for public companies. |
| SEC | Securities and Exchange Commission; primarily responsible for enforcing federal securities laws and regulating the securities industry. |
| Securities | A negotiable financial instrument representing financial value. Examples are banknotes, bonds, common stocks, options, and futures. |
| Securities Act of 1933 | Also called Truth in Securities Act; established after the stock market crash of 1929 during the Great Depression. It requires that any offer of sale of securities be registered. |
| Securities Act of 1934 | A law governing the secondary trading of securities in the US; established the SEC (Securities and Exchange Commission). |
| GASB | Governmental Accounting Standards Board; develops GAAP for state and local governments. |
| Relevance | Capable of making a difference in decision making of the user. |
| Reliability | Information must be verifiable, a faithful representation, and reasonably free from error and bias |
| Comparability | Helps detect and explain similarities and differences between companies. |
| Consistency | Using the same method of accounting from one period to another to help decision makers. |
| Materiality constraint | Big enough to make a difference in the user’s decision making process. |
| Conservatism constraint | Given two equally likely alternatives to estimate, accountants will choose the less optimistic alternative. |
| Recognition concept | States that an item should be recognized (recorded) in the financial statements when it can be defined, measured, relevant and reliable. |
| Measurement concept | States that every transaction is measured by the stated unit of measurement, such as the dollar. |
| Economic business entity assumption | All of the business transactions should be separate from those of the owners. |
| Going concern assumption | Financial statements are prepared under the assumption that the company will remain in business indefinitely unless significant evidence otherwise. |
| Monetary unit assumption | Assumes a stable currency is going to be the unit of record. |
| Time period assumption | The entity’s activities are separated into periods of time such as months, quarters or years. |
| Cost principle assumption | Assets are recorded at historical cost, not fair market value. |
| Full disclosure principle | All information pertaining to operations and financial position of the entity must be reported within the period of time in question. |
| Revenue recognition principle | Revenue is earned and recognized upon product delivery or service completion, no matter when cash is received. |
| Matching principle | Costs of doing business are recorded in the same period as the revenue they help generate, regardless of when money is actually paid. |
| Objectivity | Fairness; uninfluenced by emotion or personal opinion; does not allow bias or conflicts of interest. |
| IFRS | International Financial Reporting Standards |
| IASB | International Accounting Standards Board |
| APB | Accounting Principles Board |
