Accounting Ch. 1
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Provides services rather than products to customers?
These businesses purchase products form other businesses and sell these products to customers.
- Merchandising businesses
This business change basic inputs into products that are sold to customers.
is an info system providing reports to users about economic activities and condition of a business.
1. Identify users
2. Asess users info needs
3. design accounting info system to meet users needs
4. record econ data of business activities and events.
5. prepare accounting reports for users
This is the process accounting provides info to its users.
Consist of managers and employees.
- Internal users
- Managerial or management accounting
Includes customers, creditors, investors, and government.
Not directly involved in managing business
Suggests revenue should be recognized when it is earned, normally is when the work is performed or the good are delivered.
revenue recognition principle
Recognizing transactions and events by the amount of cash paid or received.
historical cost basis or cost principle
Suggests.. a trade-off exists between the accuracy of the financial information being produced and the cost to produce that info.
benefit vs. cost constraint or cost constraint
The IFRS framework identifies 3 characteristics as fundamental to produce financial info
- faithful representation
Financial info is enhanced if it is..
comparable , verifiable, timeliness, and understandable
This.. embodies future benefit that will contribute to directly&indirectly to future cash flows, business can control access to the benefit, transaction or recent giving rise to the benefit has already occurred.
- it is tangible or intangible, includes cash, accounts receivable, land, buildings, equipment
This is.. an obligation to give up either services or assets. They have three characteristics..
A duty to others that involves giving up a service or asset
Transaction or event already occured
accounts payable, salaries payable, and unearned revenue.
The rights of the owners are called owner's equity which is....
assets that remain after deducting the liabilities
The accounting equation is
Look at pg 11
Assets = Liabilities + Owner's Equity
What would you like to do?
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