assets expected to be converted into cash within one year of the balance sheet (e.g., Cash, Accounts Receivable, Supplies).
What are Current assets?
100
Standards that must be followed by all accountants so that there is consistency (standardization) in the industry.
What are Accounting standards?
100
Assets must be listed on the balance sheet in the amount of their original cost.
What is the Cost Principle?
100
Jon’s accountant is going to be away at their typical year-end so he is thinking of changing the fiscal period for this year to 14 months instead of 12 months.
What is the Time Period Principle?
200
individual items that appear on the balance sheet
What are accounts?
200
Long-term, operating assets used within the business to generate revenue for several years beyond the balance sheet date (e.g., Office Equipment, Building, Land).
What is are Fixed assets?
200
Businesses must consistently use the same time period for their financial records.
What is the Time Period Principle?
200
A transaction is only recorded when there is written proof (source document) that the transaction occurred.
What is the Objectivity Principle?
200
Sara purchased airline tickets for her family to take a vacation. She is wondering if she can include this as a Travel Expense on her floral business’ books.
What is the Business Entity Principle?
300
Money that is owed by a business.
What are liabilities?
300
Debts owing which will be due within one year of the balance sheet date (e.g., Accounts Payable, Bank Loan Payable—when due within one year and also referred to as a demand loan).
What is are Current liabilities?
300
Expenses must be recognized and recorded when they are incurred while making revenue.
What is the Expense Recognition Principle?
300
Revenue must be recognized and recorded at the time of the sales of goods and services.
What is the Revenue Recognition Principle?
300
Syeda purchased advertising for her new hair salon. The total bill is not due for six months so she is planning on waiting until she actually pays the bill before she records anything.
What is the Expense Recognition Principle?
400
The amount of money that an owner brings into the business
What is Owner's Equity? (or capital or net worth)
400
Debts that normally are not due to be paid within one year of the balance sheet date (e.g., Mortgage Payable, Bank Loan Payable—when due in a period longer than one year).
What are Long-term liabilities?
400
Businesses must keep their finances separate from the personal finances of the owners.
What is the Business Entity Principle?
400
Jill got a great deal on a delivery truck for her new business. She paid $17,000.00 for it but has been told it is really valued at $25,000.00. She is not sure what amount she should record.
What is the Cost Principle?
400
BONUS QUESTION: What involves identifying, measuring, recording, interpreting, and communicating the
results of business activities?
What is accounting?
500
Are an increase in equity resulting from the proceeds of the sale of goods or services.
What are revenues?
500
Are a decrease in equity resulting from the costs of the materials and services used to produce revenue.
What is are Expenses?
500
Businesses must match revenue against expenses for a specific accounting period.
What is the Matching Principle?
500
Manvir purchased office supplies for his business. He threw out the receipt as he sees no need to keep it.
What is the Objectivity Principle?
500
Nick is meeting with some potential investors next week and they would like to see his July Income Statement. He did not have a great month in July, so he is thinking of just substituting the revenue he earned in June on the July statement.
What are Matching Principle and Revenue Recognition Principle?