homework chapter one

Each business is accounted for separately from its owner or owners.

Business entity assumption

principles that determine whether an action is right or wrong

ethics

the company paid 1000 cash in dividends to the owner

(1000) cash = -1000 dividends

the company paid 10000 cash to settle the liability created in transaction c

(10000) cash = 10000 accounts payable

the company paid 15000 cash for rent of office space for the month

(1500) cash = - 1500 expenses

the company paid an assistant 3000 cash as wages for the month

(3000) cash = - 3000 expenses

the company purchased additional equipment for 6000 cash

(6000) cash + 6000 equipment

the company purchased 10,000 of additional equipment on credit (payment due within 30 days)

10,000 equipment = 10,000 accounts payable

the company completed work for a client and immediately collected the 2500 cash earned

2500 cash = 2500 revenue

the company collected 5000 cash as a partial payment for the amount owed by the client in transaction e

5000 cash + (5000) accounts receivable

owner invested 60,000 cash in the company along with equipment that had a 15,000 market value in exchange for its common stock

60000 cash + 15000 equipment = 75000 common stock

the company completed work for a client and sent a bill for $8000 to be received within 30 days

8000 accounts receivable = 8000 revenues

An assessment of whether financial statements follow GAAP

Audit

a group that sets accounting principles in the US

FASB

financial statements reflect the assumption that the business continues operating

Going concern assumption

A company records the expenses incurred to generate the revenues reported.

Matching (expense recognition) principle

A company reports details behind financial statements that would impact users' decisions.

full disclosure principle

concepts, assumptions, and guidelines for preparing financial statements

general accounting principle

info is based on actual costs incurred in transactions

measurement (cost) principle

Amount a business earns in excess of all expenses and costs associated with its sales and revenues

net income

accounting professionals who provide services to many clients

public accountants

revenue is recorded when products and services are delivered

revenue recognition principle

detailed rules used in reporting events and transactions

specific accounting principle