Chapter 1 Accounting – Flashcards
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Expense recognition
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Record expenses in the period the related revenue is recognized
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Periodicity
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The life of an enterprise can be divided into artificial time periods
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Historical cost principle
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The original transaction value upon acquisition
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Materiality
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Concerns the relative size of an item and its effect on decisions
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Revenue recognition
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Criteria usually satisfied for products at point of sale
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Going concern assumption
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The entity will continue indefinitely
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Monetary unit assumption
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A common denominator is the dollar
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Economic entity assumption
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The enterprise is separate from its owners and other entities
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Full-disclosure principle
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All information that could affect decisions should be reported
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Useful to capital providers
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The primary objective of financial reporting is to provide information
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Identify the conceptual framework within which accounting standards are developed
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Statements of Financial Accounting Concepts issued by the FASB
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A good or service has been delivered to a customer
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In general, revenue is recognized when
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Recognizing expense in the appropriate period
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In depreciating the cost of an asset, accountants are most concerned with
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Record expenses in the period that related revenues are recognized
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The primary objective of the matching principle is to
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False
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The separate entity assumption states that, in the absence of contrary evidence, all entities will survive indefinitely
