Basic Accounting Terms

MATCHING(EXPENSE) PRINCIPLE – Prescribes expenses to be reported in the same period as the revenues that were earned as a result of the expenses.
Credit – The right side of a standard account
Supplies Expense – Expenses on Supplies
Expense
Income Statement
Debit
long-term liability – an obligation of a business that is expected to be satisfied or paid in more than one year
The owner of ABC Chewing Gum Inc. bought a computer for his personal use. According to the _____________, ABC should not record the purchase in its accounting records.
a.
Revenue Recording Principle
b.
Entity Concept
c.
Matching Principle
d.
Historical Cost Concept
e.
Monetary Unit Concept – b.
Entity Concept
Management Accounting – Provides internal decision makers who are charged with achieving the goals of profitability and liquidity with information about operating, investing, and financing activities.
The first law of thermodynamics states that
wholesale merchandising business – a business that buys and resells merchandise to retail merchandising businesses
COGS – beginning inventory + purchases
The first lаw оf thermоdynаmics stаtes that
Dual Effects – Every transaction has at least two effects on the accounting equation.
variaciones del efectivo – changes in funds or cash
limitations of the income statement – things cannot be measured reliably
different accounting methods
income measurement involves judgement
What is an expense? – An expense is a decrease in economic benefits during a specific financial time period. Expenses are incurred by businesses while conducting business activities. Put differently, expenses decrease the owner's equity of the business.

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