Chapter 1

Obligation to transfer cash or other resources as a result of a past transaction

Liability

Distributions paid by a corporation to its shareholders

Dividends

Inflow of an asset from providing a good or service

Revenue

Owner's contribution of cash to a corporation in exchange for stock

Investment

Increase in equity during a period from non owner transactions

Comprehensive Income

Increase in equity from peripheral or incidental transactions

Gain

The owners' residual interest in the assets of a company

Owner's Equity

An item owned by the company representing probable future benefits

Asset

Decrease in equity from peripheral or incidental transactions

Lose

Outflow of an asset related to the production of revenue

Expense

information confirms expectations

Confirmatory value

concerns the relative size of an item and its effect on decisions

Materiality

implies consensus among different measurers

verifiability

information is useful in predicting the future

predictive value

the original transaction value upon acquisition

Historical cost principle

criteria usually satisfied at point of sale

Realization principle

the enterprise is separate from its owners

economic entity assumption

all information that could affect decisions should be reported

Full-disclosure principle

the life of an enterprise can be divided into artificial time periods

periodicity

record expenses in the period the related revenue is recognized

Matching principle

the entity will continue indefinitely

Going concern assumption