Accounting Concepts
About this set
Created by:
Scottbase on April 20, 2010
Subjects:
Description:
This is for year 11 accounting, specifically relevant to the test next monday! Good luck :D
Classes:
Accounting 3rd Hour - Raymer, Y11 Accounting
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14 terms
Terms | Definitions |
|---|---|
 Assets | These are resources controlled by the entity as a result of past transactions, from which economic benefits are expected to flow to the entity. |
| Liabilities | These are present obligations of the business as a result of past transactions, which are expected to result in an outflow of resources representing economic benefits in the future. |
| Equity | This is the residual interest in the assets of a business after deducting all its liabilities. |
| Income | These are increases in economic benefits in the form of inflows of assets or decreases in liabilities that results in increases in equity, other than contributions by owners. |
| Expenses | Expenses are decreases in economic benefits in the form of outflows or depletions of assets or increases in liabilities that result in decrease in equity, other than drawings |
| Accounting Entity | The financial affairs of the owner are kept separate and distinct from the financial affairs of the business. |
| Monetary Measurement | All transactions are measured in dollars. The NZ dollar is the common unit of measurement. |
| Going Concern | It is assumed that the business will continue into the foreseeable future. |
| Period reporting | The life of the business is divided into nominated periods. |
| Accrual Basis | The effects of transactions are recognised when they occur and they are recorded in the accounting records and reported in the financial statements of the periods to which they relate. |
| Historical Cost | Assets are recorded at the price paid at the time of purchase. |
| Revenue expenditure | This is day to day business expenditure where the benefit will be used up in the current financial period. |
| Capital expenditure | This is expenditure that creates an asset and will benefit the business beyond the current financial period. |
| Depreciation | Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. |
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