Accounting Concepts

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11 terms · These are the accounting concepts

Accounting Period Cycle

changes in financial information are reported for a specific period of time in the form of financial statements

Adequate Disclosure

financial statements contain all information necessary to understand a business's financial condition

Business Entity

financial information is recorded and reported separately from the owner's personal financial information

Consistent Reporting

the same accounting procedures are followed in the same way in each accounting period

Going Concern

Financial statements are prepared with the expectation that a business will remain in operation indefinitely.

Historical Cost

the actual amount paid for merchandise or other items bought is recorded

Matching Expenses with Revenue

Revenue from business activities and expenses associated with earning that revenue are recorded in the same accounting period

Materiality

Business activities creating dollar amounts large enough to affect business decisions should be recorded and reported at separate items in accounting items in accounting records and financial statements.

Objective Evidence

A source document is prepared for each transaction.

Realization of Revenue

Revenue is recorded at the time goods or services are sold.

Unit of Measurement

Business transactions are stated in numbers that have common values; that is, using a common unit of measurement.

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