Accounting Process: Chapter 4 Flashcards
__________ recognizes revenue when it is earned regardless of collection.
Realization of Revenue Principle
__________ recognizes expenses when it is incurred regardless of payment.
Realization of Expense Principle
Expense is recognized when revenue is recognized because it is not possible to earn revenue without incurring expenses.
Matching Principle
Assets, liabilities, revenues or expenses should be recognized based on the period they relate or based on the occurrence of the transaction/event rather than based on cash received or paid.
Accrual Assumption
_________ recognizes revenue only when cash is collected and expenses only when cash is paid.
Cash Concept
An ________ represents inflow of cash or other assets coming from a client or customer for service rendered or merchandise sold.
Income
________ is an income coming from the normal course of business.
Revenue
A ______ is an income which may arise but not really from its normal course of operation.
Gain
It is the consumption of asset or using up of service to generate revenue.
Expense
It is the result when income is greater than expenses.
Profit
It is the result when income is less than expenses.
Loss
Cash flows from ______ activities represent increase in cash coming from the owner’s contribution and from the amount borrowed from the bank.
Financing Activities
Balance Sheet Form: where all elements are in one column with the liabilities and owner’s equity placed after the assets
Report Form
Balance Sheet Form: assets on the left side with liabilities and owner’s equity on the right side
Account Form
It is the amount of remaining assets after deducting all liabilities and that this belongs to the owner.
Net Worth or Net Assets
