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Question	Answer
Define equity	Residual interest in the assets of the entity after the deduction of liabilities. A-L
Define going concern	The business life is continuous into the foreseeable future.
Define monetary measurement	All financial information is recorded in dollars and cents.
Define historical cost	Transactions are recorded at their original purchase price.
Define assets	Assets are future economic benefits or service potential, are controlled by the entity and are the result of a past transaction.
Define period reporting	The business's life is divided into time periods (allows financial reports to be prepared).
Define understandability	Information should be clearly presented so that users can comprehend its meaning.
Define comparability	Users must be able to find similarities and differences with similar business's and with previous accounting periods.
Define reliability	Information must be a true record of transactions and events. Must be free from bias, neutral and verifiable.
Define accrual basis	Cash and credit transaction are recorded when they occur. Transactions are recorded in the period they belong to.
Define relevance	Information that relates to or effects a decision. Must be timely and provide predictive and feedback value.
Define income	an inflow, other enhancement or saving in outflow and an increase in assets or decrease in liabilities which increases owners equity and is not a contribution from the owner.
Define expenses	Consumption or loses of service

Level 2 Accounting Definitions

	Created by Kelsey Rohloff over 8 years ago