Flashcards
Accounting - The Conceptual Framework
Cards in this deck (6)
- 1The Accrual Basis of AccountingRevenues are recognised when they are earned and not (necessarily) when they are received.
Simple terms: Income is recorded regardless of whether cash is received or not. - 2Define an asset (3 points, 2 recognition criteria)1. A resource that is controlled by the entity
2. Past event
3. Inflow of future economic benefits
1. The cost can be reliably measured
2. Probable inflow of economic benefits - 3Define a liability (3 points, 2 reconigition criteria)1. Present obligation of the entity
2. Past event
3. Outflow of resources
1. Cost of the obligation can be measured reliably
2. Probable outflow of economic benefits - 4Define Owner's EquityIncome minus expenses
(Informal recognition criteria: If it's not an asset, a liability, an income or an expense; it's most likely owner's equity) - 5Define an income1. An increase in future economic benefits due to an increase in assets OR a reduction in liabilities.
2. The amount of income must be reliably measured. - 6Define an expense1. A decrease in future economic benefits due to a reduction in assets OR an increase in liabilities.
2. The amount of expense must be reliably measured
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- Description
- Flash cards on fundamental accounting principles and the conceptual framework for South African students. (Made with love by a South African ACCN1006 student at Wits University in 2015)
- Created by
- BryanTurner · Mar 2015
- Updated
- Apr 5, 2017
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