Principles Of Accounting Level 1 Chapter 1

Accrual Basis Accounting – Records revenue when earned and expenses when incurred, regardless of the timing of cash receipts or payments.
On a T account, Credit = – Right
PERPETUAL INVENTORY SYSTEM – THE COMPUTERIZED ACCOUNTING INVENTORY SYSTEM IN WHICH THE BUSINESS KEEPS A CONSTANT/RUNNING RECORD OF INVENTORY AND COST OF GOODS SOLD
component percentage of net income – net income / sales
The process of identifying, measuring, analyzing, and communicating financial information needed by management to plan, evaluate, and control an organization's operations is called

A. financial accounting.

B. managerial accounting.

C. auditing.

D. tax accounting. – B. managerial accounting.

Usually long term nature. No physical substance, but value of owners of the organization – Intangible assets
Business Ethics – The use of ethics in making business decisions.
financial accounting – provides information for external decision makers
Accrual-Basis Accounting – Accounting basis in which companies record transactions that change a company's financial statements in the periods in which the events occur.
Aspects of an Income Statement – Revenues
-Expenses
=
Net income
Due professional care requires auditors to
What is the estimate of the asset's value at the end of its useful life called? – Salvage Value
Statement of Financial Position (Balance Sheet) – A statement setting out the assets, liabilities and owner's equity of a business at a given point in time.
full disclosure principle – An accounting principle that requires that a business's financial statements provide information on all the significant facts that have a bearing on their interpretation
Due prоfessiоnаl cаre requires аuditоrs to
Expenses – The cost of running a business

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