Chapter 2 - Transactions - Chapter 2 The Accounting Information System Economic Entity The common knowledge of using current locations currency Time

Chapter 2 - Transactions - Chapter 2 The Accounting...

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Chapter 2: The Accounting Information System - Economic Entity: The common knowledge of using current location’s currency - Time Period Assumption: The life of the company being divided into monthly, quarterly, etc. - Going Concern: Auditor’s warning that company may not last another year in business - Monetary Unit Assumption: Company accounts for and reports its financial results in monetary terms (US dollar, euro, yen, etc.) - Expense Recognition: An expense must be recorded and reported in the same period as the revenue that it helped generate. May or may not be in the same period that cash is paid. - Revenue is recorded when you earn it - Conservatism Principle: Accountants should take care to avoid overstating assets or income when they prepare financial statements. Should not lead to biased financial
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  • Fall '14
  • Steven
  • Accounting, Generally Accepted Accounting Principles, United States dollar, Double-entry bookkeeping system, Monetary unit assumption

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