Accounting-Exam 1
Matching principle
A company records the expenses incurred to generate the revenues reported
Full disclosure principle
A company reports details behind financial statements that would impact user's decisions
Public accountants
Accounting professionals who provide services to many clients
Net Income
Amount a business earns after paying all expenses and costs associated with its sales and revenues
Tax accounting
An accounting area that includes planning future transactions to minimize taxes paid
Audit
An examination of an organization's accounting system and records that adds credibility to financial statements
General accounting principle
Derived from long-used and generally accepted accounting practices
Business entity assumption
Every business is accounted for separately from its owner or owners
Going-concern assumption
Financial statements reflect the assumption that the business continues operating
Cost principle
Information is based on actual costs incurred in transactions
Ethics
Principles that determine whether an action is right or wrong
Revenue recognition principle
Revenue is recorded only when the earnings process is complete
Specific accounting principle
Usually created by a pronouncement from an authoritative body