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