Accounting Chapter 10 Vocabulary

Historical Cost Principle – assets should be recorded at their actual cost
Accounting equation – Assets = Liabilities + Owner's Equity
Net Income – The results of operation that occurs when total revenues are greater than total expenses
Cost-benefit Constraint – only information with benefits of disclosure greater than the costs of providing it need be disclosed
Risk – Liquidity, and solvency
Expense Matching Principle – requires that expenses be recorded when incurred in earning revenue. Matching costs with benefits
The financial activities for a young, single person will probably be the same as those for an older couple with no dependent children at home.
Drawing – Amount taken out by owner for personal use
units of activity method= deprication rate per output unit – productive output
(cost- residual value)/service life output
statement of operations – Another name for the income statement
Give two examples of service businesses. – Should involve businesses that perform activities for a fee.
12. – Know the difference between FOB shipping point and FOB destination
The finаnciаl аctivities fоr a yоung, single persоn will probably be the same as those for an older couple with no dependent children at home.
Usually long term nature. No physical substance, but value of owners of the organization – Intangible assets

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