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189 Cards in this Set
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- Back
- 3rd side (hint)
Accounting |
Language of business |
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Accounting |
provides accurate picture of the business in financial terms |
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Accounting (according to FRSC) |
a service activity; to provide quantitative information useful in making economic decisions |
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Accounting (according to AICPA) |
the art of recording, classifying, and summarizing in terms of money, transactions, and events; and interpreting the results thereof |
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Accounting (according to AICPA) |
the art of recording, classifying, and summarizing in terms of money, transactions, and events; and interpreting the results thereof |
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Accounting (according AAA) |
the process of identifying, measuring, and communicating economic information to permit informed judgements and decisions by users of the information |
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Accounting (according to AICPA) |
the art of recording, classifying, and summarizing in terms of money, transactions, and events; and interpreting the results thereof |
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Accounting (according AAA) |
the process of identifying, measuring, and communicating economic information to permit informed judgements and decisions by users of the information |
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Financial Reports should be: |
- Understandable - Reliable - Relevant - Complete |
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Accounting (according to AICPA) |
the art of recording, classifying, and summarizing in terms of money, transactions, and events; and interpreting the results thereof |
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Accounting (according AAA) |
the process of identifying, measuring, and communicating economic information to permit informed judgements and decisions by users of the information |
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Financial Reports should be: |
- Understandable - Reliable - Relevant - Complete |
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Financial Information should have: |
Relevance and Faithful representation |
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Financial information is relevant when it has: |
Predictive value and Confirmatory value |
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Financial information is relevant when it has: |
Predictive value and Confirmatory value |
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Predictive value |
it can be used as an input to processes employed by users to predict future outcomes |
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Financial information is relevant when it has: |
Predictive value and Confirmatory value |
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Predictive value |
it can be used as an input to processes employed by users to predict future outcomes |
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Confirmatory value |
it provides feedback about previous evaluations |
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Financial information is relevant when it has: |
Predictive value and Confirmatory value |
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Predictive value |
it can be used as an input to processes employed by users to predict future outcomes |
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Confirmatory value |
it provides feedback about previous evaluations |
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Financial information is faithfully represented when it is: |
- complete - neutral - free from errors |
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Financial information is faithfully represented when it is: |
- complete - neutral - free from errors |
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Enhancing Qualitative Characteristics (of Financial Information) |
1. Comparability 2. Verifiability 3. Timeliness 4. Understandability |
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Financial information is faithfully represented when it is: |
- complete - neutral - free from errors |
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Enhancing Qualitative Characteristics (of Financial Information) |
1. Comparability 2. Verifiability 3. Timeliness 4. Understandability |
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Users of Accounting Information |
External and Internal |
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Financial information is faithfully represented when it is: |
- complete - neutral - free from errors |
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Enhancing Qualitative Characteristics (of Financial Information) |
1. Comparability 2. Verifiability 3. Timeliness 4. Understandability |
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Users of Accounting Information |
External and Internal |
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Internal user (of Accounting Information) |
people that are part of the business/organization |
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Financial information is faithfully represented when it is: |
- complete - neutral - free from errors |
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Enhancing Qualitative Characteristics (of Financial Information) |
1. Comparability 2. Verifiability 3. Timeliness 4. Understandability |
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Users of Accounting Information |
External and Internal |
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Internal user (of Accounting Information) |
people that are part of the business/organization |
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External user (of Accounting Information |
people that are NOT part of the business/organization |
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Financial information is faithfully represented when it is: |
- complete - neutral - free from errors |
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Enhancing Qualitative Characteristics (of Financial Information) |
1. Comparability 2. Verifiability 3. Timeliness 4. Understandability |
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Users of Accounting Information |
External and Internal |
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Internal user (of Accounting Information) |
people that are part of the business/organization |
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External user (of Accounting Information |
people that are NOT part of the business/organization |
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Primary user (of Accounting Information |
financial reports are directed to them |
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Financial information is faithfully represented when it is: |
- complete - neutral - free from errors |
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Enhancing Qualitative Characteristics (of Financial Information) |
1. Comparability 2. Verifiability 3. Timeliness 4. Understandability |
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Users of Accounting Information |
External and Internal |
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Internal user (of Accounting Information) |
people that are part of the business/organization |
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External user (of Accounting Information) |
people that are NOT part of the business/organization |
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Primary user (of Accounting Information) |
financial reports are directed to them |
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Other users (of Accounting Information) |
financial reports are NOT directed to them |
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Forms of Business Organizations |
1. Single/Sole Proprietorship 2. Partnership 3. Corporation |
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Single or Sole Proprietorship |
A business owned by one individual only |
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Partnership |
An association of two or more people who contribute money and resources to a common fund |
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Corporation |
Most complex form of business organization owned by shareholders |
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Forms of Business Organizations |
1. Single/Sole Proprietorship 2. Partnership 3. Corporation |
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Single or Sole Proprietorship |
A business owned by one individual only |
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Partnership |
An association of two or more people who contribute money and resources to a common fund |
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Corporation |
Most complex form of business organization owned by shareholders |
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Types of Business Operations |
- Service business - Merchandising business - Manufacturing business |
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Service business |
A type of business operation that renders service to customers or clients in exchange for a fee |
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Merchandising business |
A type of business operation that buys and sells goods or commodities at a profit |
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Manufacturing business |
A type of business operation that produces and sells goods |
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Specialized Accounting Fields |
1. Public Accounting 2. Private Accounting 3. Accounting Education 4. Government |
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Specialized Accounting Fields |
1. Public Accounting 2. Private Accounting 3. Accounting Education 4. Government |
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Public Accounting |
Accountants and staff offering services on a fee basis |
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Specialized Accounting Fields |
1. Public Accounting 2. Private Accounting 3. Accounting Education 4. Government |
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Public Accounting |
Accountants and staff offering services on a fee basis |
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Services offered by CPAs in public practice are: |
a. Auditing b. Tax services c. Management advisory services / Management consulting |
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Specialized Accounting Fields |
1. Public Accounting 2. Private Accounting 3. Accounting Education 4. Government |
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Public Accounting |
Accountants and staff offering services on a fee basis |
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Services offered by CPAs in public practice are: |
a. Auditing b. Tax services c. Management advisory services / Management consulting |
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Private Accounting |
being employed in a business firm or non-profit organization |
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Specialized Accounting Fields |
1. Public Accounting 2. Private Accounting 3. Accounting Education 4. Government |
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Public Accounting |
Accountants and staff offering services on a fee basis |
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Services offered by CPAs in public practice are: |
a. Auditing b. Tax services c. Management advisory services / Management consulting |
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Private Accounting |
being employed in a business firm or non-profit organization |
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Accounting Education |
being employed to teach Accounting |
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Specialized Accounting Fields |
1. Public Accounting 2. Private Accounting 3. Accounting Education 4. Government |
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Public Accounting |
Accountants and staff offering services on a fee basis |
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Services offered by CPAs in public practice are: |
a. Auditing b. Tax services c. Management advisory services / Management consulting |
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Private Accounting |
being employed in a business firm or non-profit organization |
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Accounting Education |
being employed to teach Accounting |
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Government Accounting |
being employed by any government unit |
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Basic Financial Statements |
Formal reports prepared by accountants |
Statements that show financial effects of transactions |
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Elements of Financial Statements |
1. Statement of Financial Position (SFP) 2. Income Statement 3. Statement of Changes in Equity 4. Cash Flow Statement |
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Statement of Financial Position (SFP) |
shows the financial position of the business entity at any given time
Assets, Liabilities, and Owner's Equity |
formerly known as the Balance Sheet |
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Elements of Financial Statements |
1. Statement of Financial Position (SFP) 2. Income Statement 3. Statement of Changes in Equity 4. Cash Flow Statement |
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Statement of Financial Position (SFP) |
shows the financial position of the business entity at any given time
Assets, Liabilities, and Owner's Equity |
formerly known as the Balance Sheet |
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Income Statement |
shows the operating performance of the busintentity for a given period
Income and Expenses |
also known as the Statement of Profit and Loss and other comprehensive income |
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Statement of Changes in Equity |
shows the movements in various elements of the owner's capital for a certain period of time |
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Prepaid Expenses |
Expenses paid for by the business in advance |
Office supplies, store supplies, prepaid ad, prepaid insurance |
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Contra-Asset Accounts |
-Allowance for Bad Debts -Accumulated Depreciation |
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Allowance for Bad Debts |
Losses due to uncollectible accounts |
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Accumulated Depreciation |
Represents the expired cost of property, plant, and equipment and as a result of usage and passage of time |
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Non-current Assets |
assets that do not meet the criteria of a current asset |
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Property, Plant, and Equipment |
Tangible assets held by a business for use in production of goods or services, or rental to others, or for administrative purposes. Expected to be used during more than one accounting period. |
Land Building Equipment Automobile Truck |
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Long-Term Investments |
Assets held by an enterprise for the accretion of wealth through capital distribution |
Interest Royalties Dividends and rentals |
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Liabilities |
a present obligation of an entity to transfer economic resources as a result of past events |
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Current Liabilities |
Liabilities are classified as current when: a. expected to be settled in the entity's normal operating cycle b. held primarily for the purpose of being traded c. due to be settled within twelve months after the balance sheet date |
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Accounts Payable |
outstanding balance owed to vendors or suppliers |
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Cash Flow Statement |
explains the changes in cash and cash equivalents during an accounting period |
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Notes Payable |
amounts owed to creditors evidenced by a written promise to pay |
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Accrued Liabilities |
unpaid expenses that haven't been logged under Accounts Payable during an accounting period; haven't received invoice yet |
Salaries Payable Utilities Payable Interest Payable Taxes Payable |
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Unearned Revenues |
Pre-payment |
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Non-current Liabilities |
Long-term liabilities or obligations which are payable for a period longer than one year |
Mortgage Payable Bonds Payable |
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Mortgage Payable |
long-term debts/loan that is secured by property |
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Bonds Payable |
form of long-term debt in which the issuer of bonds makes a formal agreement to pay interest |
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Owner's Equity |
Residual interest in the assets after deducting all its liabilities |
Capital Withdrawal Income Summary |
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Capital |
the owner's investment of assets into a business |
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Withdrawal |
Used to record any withdrawal of cash or other assets of the business by the owner intended for any personal or non-business use |
Also known as Drawing or Personal |
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Income Summary |
a temporary account used at the end of the accounting period to close income and expense account the balance of this account shows the net income or net loss for the period it is closed to the capital account |
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Real Accounts |
-composed of Assets, Liabilities, and Owner's Equity
-are not closed at the end of the accounting period |
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Nominal Accounts |
closed or put to zero balance at the end of the accounting period |
Temporary Accounts |
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Income |
increase in assets or a decrease in liabilities that result in increase of equity
revenue and gains |
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Revenue |
income from the normal business activities |
sales fees interests etc. |
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Gains |
income that is not from the ordinary course of business |
Disposal of noncurrent assets Unrealized gain on trading Etc. |
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Expenses |
decrease in assets or increase in liabilities that result in decrease in equity
Losses and expenses |
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Cost of sales |
Cost of merchandise sold |
Expenses in the course of the ordinary regular activities |
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Rent expense |
This is used to record expenses for leased office spaces, building, or other assets |
Expenses in the course of the ordinary regular activities |
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Supplies expense |
Records the supplies used by the business |
Expenses in the course of the ordinary regular activities |
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Depreciation expense |
Records the portion of the cost of a tangible asset |
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Assets |
present economic resources controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise
Current Assets Non-current Asssets |
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Current Assets |
Assets are classified as current assets when: a. expected to be realized in, or is intended for sale or consumption in, the entity's normal operating cycle
b. held primarily for the purpose of being traded
c. expected to be realized within twelve months of the balance sheet date
d. cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the balance sheet date |
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Cash |
Any medium of exchange that the bank will accept at face value
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Coins, currencies, checks, money orders, bank drafts, and bank deposits |
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Marketable Securities |
Stocks or bonds purchased by the enterprise and are to be held for only a short span of time |
Usually purchased when a business has excess cash |
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Accounts Receivable |
any amount of money owed by customers for purchases made on credit |
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Notes Receivable |
a written promise to receive money at a future date |
usually made up of interest and principal |
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Depreciation expense |
The appropriate portion of a company's tangible asset's cost that is being used up during the accounting period |
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Interest expense |
cost of borrowing money from banks, bond investors, and other sources |
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Advertising expense |
cost of advertisements |
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Salaries and Wages expense |
Total gross salary of the employees |
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Utility expense |
cost of consumption of utilities like light, phone, and internet |
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Uncollectible Accounts expense |
Amount of receivables that are deemed to be uncollectible from the customer |
Bad debt expense Doubtful accounts expense |
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Miscellaneous expense |
Expenses that cannot be classified from the above expenses |
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Time period assumption |
a business should report their financial statements appropriate to a specific period of time - Calendar Year - Fiscal Year - Interim Period |
Basic accounting principles |
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Calendar Year |
A twelve-month period starts on January 1 and ends on December 31 |
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Losses |
do not arise in the course of ordinary regular activities and include losses resulting from disasters |
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Basic Accounting Principles |
1. Cost principle 2. Revenue recognition (realization) principle 3. Matching principle 4. Accrual basis 5. Monetary unit assumption 6. Going concern assumption 7. Business entity assumption 8. Time period assumption 9. Materiality constraint 10. Cost-benefit constraint 11. Dual aspect concept |
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Cost principle |
states that assets purchased are recorded using the invoice price |
Basic accounting principle |
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Revenue recognition principle |
states that the revenue is earned when the service is already performed or the goods are already delivered to the customer regardless of the receipt of the cash |
Basic accounting principle |
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Matching principle |
states that all costs and expenses that are incurred in the production of revenues must be matched with the revenue in the period in which efforts are expended to generate the revenue |
Basic accounting principle |
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Accrual basis |
transactions are recognized when they occur |
Basic accounting principle |
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Monetary unit assumption |
states the only transaction data that can be expressed in terms of money should be included in the accounting records |
Basic accounting principle |
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Going concern assumption |
states that the business entity will continue to operating indefinitely - for a period of time sufficient to carry out its existing objectives |
Basic accounting principle |
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Business entity assumption |
financial records of a business must be kept separate from those of its owners or any other business |
Basic accounting principles |
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Miscellaneous expense |
Expenses that cannot be classified from the above expenses |
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Time period assumption |
a business should report their financial statements appropriate to a specific period of time - Calendar Year - Fiscal Year - Interim Period |
Basic accounting principles |
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Calendar Year |
A twelve-month period starts on January 1 and ends on December 31 |
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Fiscal Year |
A twelve-month period but starts from any other month than January |
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Losses |
do not arise in the course of ordinary regular activities and include losses resulting from disasters |
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Basic Accounting Principles |
1. Cost principle 2. Revenue recognition (realization) principle 3. Matching principle 4. Accrual basis 5. Monetary unit assumption 6. Going concern assumption 7. Business entity assumption 8. Time period assumption 9. Materiality constraint 10. Cost-benefit constraint 11. Dual aspect concept |
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Cost principle |
states that assets purchased are recorded using the invoice price |
Basic accounting principle |
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Revenue recognition principle |
states that the revenue is earned when the service is already performed or the goods are already delivered to the customer regardless of the receipt of the cash |
Basic accounting principle |
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Matching principle |
states that all costs and expenses that are incurred in the production of revenues must be matched with the revenue in the period in which efforts are expended to generate the revenue |
Basic accounting principle |
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Accrual basis |
transactions are recognized when they occur |
Basic accounting principle |
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Monetary unit assumption |
states the only transaction data that can be expressed in terms of money should be included in the accounting records |
Basic accounting principle |
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Going concern assumption |
states that the business entity will continue to operating indefinitely - for a period of time sufficient to carry out its existing objectives |
Basic accounting principle |
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Business entity assumption |
financial records of a business must be kept separate from those of its owners or any other business |
Basic accounting principles |
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Miscellaneous expense |
Expenses that cannot be classified from the above expenses |
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Time period assumption |
a business should report their financial statements appropriate to a specific period of time - Calendar Year - Fiscal Year - Interim Period |
Basic accounting principles |
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Calendar Year |
A twelve-month period starts on January 1 and ends on December 31 |
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Fiscal Year |
A twelve-month period but starts from any other month than January |
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Interim Period |
A business period within an accounting period |
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Losses |
do not arise in the course of ordinary regular activities and include losses resulting from disasters |
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Basic Accounting Principles |
1. Cost principle 2. Revenue recognition (realization) principle 3. Matching principle 4. Accrual basis 5. Monetary unit assumption 6. Going concern assumption 7. Business entity assumption 8. Time period assumption 9. Materiality constraint 10. Cost-benefit constraint 11. Dual aspect concept |
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Cost principle |
states that assets purchased are recorded using the invoice price |
Basic accounting principle |
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Revenue recognition principle |
states that the revenue is earned when the service is already performed or the goods are already delivered to the customer regardless of the receipt of the cash |
Basic accounting principle |
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Matching principle |
states that all costs and expenses that are incurred in the production of revenues must be matched with the revenue in the period in which efforts are expended to generate the revenue |
Basic accounting principle |
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Accrual basis |
transactions are recognized when they occur |
Basic accounting principle |
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Monetary unit assumption |
states the only transaction data that can be expressed in terms of money should be included in the accounting records |
Basic accounting principle |
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Going concern assumption |
states that the business entity will continue to operating indefinitely - for a period of time sufficient to carry out its existing objectives |
Basic accounting principle |
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Business entity assumption |
financial records of a business must be kept separate from those of its owners or any other business |
Basic accounting principles |
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Miscellaneous expense |
Expenses that cannot be classified from the above expenses |
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Time period assumption |
a business should report their financial statements appropriate to a specific period of time - Calendar Year - Fiscal Year - Interim Period |
Basic accounting principles |
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Calendar Year |
A twelve-month period starts on January 1 and ends on December 31 |
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Fiscal Year |
A twelve-month period but starts from any other month than January |
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Interim Period |
A business period within an accounting period |
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Materiality constraint |
a threshold that determines whether a certain transaction is significant enough to be in the financial statement |
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Losses |
do not arise in the course of ordinary regular activities and include losses resulting from disasters |
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Basic Accounting Principles |
1. Cost principle 2. Revenue recognition (realization) principle 3. Matching principle 4. Accrual basis 5. Monetary unit assumption 6. Going concern assumption 7. Business entity assumption 8. Time period assumption 9. Materiality constraint 10. Cost-benefit constraint 11. Dual aspect concept |
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Cost principle |
states that assets purchased are recorded using the invoice price |
Basic accounting principle |
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Revenue recognition principle |
states that the revenue is earned when the service is already performed or the goods are already delivered to the customer regardless of the receipt of the cash |
Basic accounting principle |
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Matching principle |
states that all costs and expenses that are incurred in the production of revenues must be matched with the revenue in the period in which efforts are expended to generate the revenue |
Basic accounting principle |
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Accrual basis |
transactions are recognized when they occur |
Basic accounting principle |
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Monetary unit assumption |
states the only transaction data that can be expressed in terms of money should be included in the accounting records |
Basic accounting principle |
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Going concern assumption |
states that the business entity will continue to operating indefinitely - for a period of time sufficient to carry out its existing objectives |
Basic accounting principle |
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Materiality constraint |
a threshold that determines whether a certain transaction is significant enough to be in the financial statement |
Basic accounting principles |
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Cost-benefit constraint |
states that the benefit securing the financial information should outweigh the related cost |
Basic accounting principles |
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Dual aspect concept |
states that every business transaction affects two or more different accounts |
Basic accounting principles |