QUESTIONS UNIT4-1 - QUESTIONS 1.

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QUESTIONS 1. Describe the Revenue Recognition Principle in your own words. Amounts charged to customers for goods and services increase the stockholders’ equity of a company  when the goods are delivered to customers or when services are provided.   2. Describe the Matching Principle in your own words The cost of the resources used to provide goods and services to customers decrease stockholders’ equity  when the associated revenue is recognized. 3. Describe the Historical Cost Principle in your own words Valuation is determined by the cash equivalent price in a transaction with an outside party. Valuation is not  changed except for depreciation or impairment until another transaction with an outside party takes place. 4. Describe the Role of Estimation in accrual-basis accounting. Estimation is required in accrual-based accounting because recognition of earnings or of matching  expenses may occur before an objective price is determinable. 5. Describe how cost-benefit constraints impact accounting. Cost-benefit constraints allow simpler accounting to be used when the requirements of full accrual 
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This note was uploaded on 06/20/2010 for the course FINA 6266 taught by Professor Burt during the Spring '10 term at University of Arkansas for Medical Sciences.

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QUESTIONS UNIT4-1 - QUESTIONS 1.

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