H historical cost the historical cost principle

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HHistorical CostThe historical cost principle refers to the fact that transactions are recorded at the cost that existed atthe time the transaction occurred. In the case of assets, it means that their value in the financialrecords is shown at historical cost, rather than current market value. When combined with theprinciple of Conservatism, it means that an asset's value may be reduced if it is deemed to havepermanently lost value but it cannot be increased if it is deemed to have gained value.IIASBThe International Accounting Standards Board (IASB) is the governing body that issues accountingrules and standards known as International Financial Reporting Standards, or IFRS. IFRS arecommonly used throughout the world.IFRSIFRS stands for International Financial Reporting Standards. IFRS are the accounting rules andstandards issued by the International Accounting Standards Board (IASB) which are followed inmany countries outside the United States (US). In the US companies adhere to a slightly differentset of accounting rules and principles, referred to as GAAP (Generally Accepted AccountingPrinciples) are issued by the Financial Accounting Standards Board (FASB).ImpairmentA permanent reduction in the value of an asset due to technological or market factors that cause theasset to have less value than it currently has in the accounts of the business. Impairment typicallyapplies to intangible assets such as goodwill or patents.Implicit TransactionsTransactions that do not involve a specific triggering activity, event, or exchange of resources fromone party to another, and that are not accompanied by an invoice or other paper documentation.Often, implicit transactions represent changes in value related to the passage of time, such asdepreciation, interest expense, and the amortization of a prepaid expense. Implicit transactions areoften recorded using adjusting journal entries.Income Before Taxes
The amount shown on the Income Statement after all expenses have been taken away from therevenue for the period but before any tax expense for the period. May also be referred to as PretaxProfit.Income StatementSummarizes the earnings of a business (revenues minus expenses) over a designated period oftime. Shows activity during the period for all nominal accounts.Income Tax ExpenseThe amount determined by multiplying the applicable income tax rate by the income before taxes (orpretax profit) on the Income Statement.Income Taxes PayableThe amount determined by multiplying the applicable income tax rate by the taxable income on theincome tax return.Indirect MethodRefers to the method of reporting the cash flow from operating activities on the statement of cashflows by using net income and adjusting for non-cash items such as depreciation, adjusting for non-operating items such as gains and losses, and adjusting for changes in current asset and currentliability accounts. The method starts with net income and adjusts it by the amounts accruals changed

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Generally Accepted Accounting Principles

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