Asset is any resource owned or controlled by a business. Assets represent value that can be converted into cash. Assets are recorded on balance sheet under monetary value
Going concern assumption assumes enterprise will continue operating long enough. Notes to financial statements provide information about financial position. Net income equals revenues minus expenses and dividends
Depreciation and amortization are methods for spreading asset costs over time. Depreciation covers tangible assets, amortization covers intangible assets. Both methods are recorded on income statement and used in EBITDA calculation
Both methods calculate value of business assets over time. Amortization spreads intangible asset costs over useful life. Depreciation spreads fixed asset costs over useful life
Revenue recognition and reporting are complex problems for accountants. All earned income falls into gross or net categories. GAAP guidelines were established by Emerging Issues Task Force in 1999
MTM measures fair value of assets and liabilities based on current market conditions. Alternative to historical cost accounting maintaining original purchase price. Provides more accurate appraisal of current financial situation