Level 2 Accounting Definitions

Kelsey Rohloff
Flashcards by Kelsey Rohloff, updated more than 1 year ago
Kelsey Rohloff
Created by Kelsey Rohloff about 5 years ago


Flashcards on Level 2 Accounting Definitions, created by Kelsey Rohloff on 09/09/2015.

Resource summary

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
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