ACC 113 Lecture Notes - Lecture 8: Accounting, Accounting Equation, Financial Statement

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The fasb and iasb define useful information as having two fundamental qualities: Relevance the information indicates it will affect business decisions. Predictive value accurate representation of the future. Confirmatory value confirms or corrects prior expectations. Materiality whether an item is large enough to influence the decision of a creditor/investor company specific (ge vs. coke) Faithful representation information that is complete, neutral, and free of error. Full disclosure principle: accounting principle that requires that companies disclose all circumstances and events that would make a difference to financial statement users. Cost constraint: weighs the cost that companies will incur to provide the information against the benefit that financial statement users will gain from having the information available. Analyze the effect of business transactions on the basic accounting equation. Accounting information system: the system of collecting and processing transaction data and communicating financial information to decision-makers electronic data-processing (edp) Systems: relies on the accounting cycle, accounting transactions.

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