Vocabulary
Budget
An estimate of income and expenditure for a set period of time.
Going Concern
assumes organization will continue into the foreseeable future.
What is the difference between bookkeeper and accountant?
Bookkeeper records and classifies a company's transactions.
Accountant builds on the information provided from the bookkeeper.
Revenue Recognition
Revenue is the gross inflow of cash, receivables, or other considerations arising in the course of ordinary activities of an enterprise from the sale of goods, rendering of services, and use of enterprise resources by others yielding interests, royalties, and dividends.
Taxes
compulsory contribution to state revenue, levied by the government on workers' income and business profits, or added to the cost of some goods, services, and transactions.
Monetary Unit
only transaction data that can be expressed in terms of money is included in the accounting records.
Difference between fixed and variable costs
Fixed costs remain the same regardless of production output and variable costs vary based on the amount of output produced.
Matching Principle
the expenses incurred in an accounting period should be matched with the revenues recognized in that period
Fixed Cost
Economic Entity
includes any business enterprise where the owner’s personal affairs are kept separate from the company affairs.
Accounting Process
1. Identification
2. Recording
3. Communication Accounting Reports
4. Analyze and Interpert
Full Disclosure
the financial statements should act as a means of conveying and not concealing.
Bookkeeper
a person whose job is to keep records of the financial affairs of a business.
Customer
- Customer needs
- Purchase Behavior
- Perceptions
Identify the members of the accounting profession and what are their roles?
Public Accountants who offer their service to the public. Private Accountants who offer their service to the public.
Objectivity
the accounting data should be definite, verifiable and free from the personal bias of the accountant.
GAAP
Generally Accepted Accounting Principles, are a collection of commonly followed accounting rules and standards for financial reporting.
Consistency
it is important that companies make sure that they use the same accounting method across all accounting practices and accounting periods. Maintaining consistency in accounting methods will ensure that accounting records over several accounting periods can easily be compared.
What is a skateholder?
Someone who is connected to a business.
Historical Cost
an asset is ordinarily recorded in the accounting records at the price paid to acquire it at the time of its acquisition and the cost becomes the basis for the accounts during the period of acquisition and subsequent accounting periods.