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ACCT101-103 Chap 1-3
ACCT
| Term | Definition |
|---|---|
| Generally accpected accounting principles (GAAP) | rules that specify acceptable accounting practices |
| Measurement principle | principle that prescribes financial statement information and its underlying transactions and events be based on relevant measures of valuation also called the cost principle. |
| revenue recognition principle | the principle prescribing that revenue is recognized when goods or services are delivered to customers |
| Expense recognition (or matching) principle | prescribes expenses to be reported in the same period as the revenues that were earned as a result of the expenses |
| full disclosure principle | principle that prescribes financial statements including notes to report all relevant information about an entity operations and financial condition |
| Going concern assumption | principle that prescribes financial statement to reflect the assumption that the business will continue operating |
| Monetary unit assumption | principle that assumes transactions and events can be expressed in money units |
| Time period assumption | assumption that an organization activities can be divided into specific time periods such as month, quarters, or years. |
| Business entity assumption | principle that requires a business to be accounted for separately from its owners and from any other entity |
| cost benefit constraint | the notion that the benefit of a disclosure exceeds the cost of that disclosure |
| equity increases from what | owner investments ( common stock) and Revenues |
| equity decreases from what | dividends and expenses |
| Accounting | is information and measurement system that identifies, records, and communicates an organization's business activities |
| What is the accounting equation ? | Asset=Liabilities + Equity |
| Saddleback Company paid off $33,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation? | Assets decrease $33,000; liabilities decrease $33,000. |
| How to find Net Income | Revenues - Expenses = Net Income |
| Source documents | identify and describe transactions and events entering the accounting system |
| Green Cleaning purchased $590 of office supplies on credit. The company’s policy is to initially record prepaid and unearned items in balance sheet accounts. | Debit Office supplies, $590; credit Accounts payable, $590. |
| All adjusting entries are made at the end of an accounting period | True |
| Accumulated depreciation is shown on the balance sheet as a subtraction from the cost of its related asset. | True |
Created by:
bellam08
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