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Accounting chap 4 vocab - Chap 4 Recognition the process of...

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Chap 4 Recognition – the process of recording an item in the financial statements as an asset, liability, revenue, expense, or the like Historical cost – the amount paid for an asset and used as a basis for recognizing it on the balance sheet and carrying it on later balance sheets Current value – the amount of cash, or its equivalent, that could be received by selling an asset currently Cash basis – a system of accounting in which revenues are recognized when cash is received and expenses when cash is paid Accrual basis – a system of accounting in which revenues are recognized when earned and expenses when incurred Revenues – inflows of assets or settlements of liabilities from delivering or producing goods, rendering services, or conducting other activities Revenue recognition principle – revenues are recognized in the income statement when they are realized, or realizable, and earned
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