COMM 217 Definitions Flashcards
Transaction
An exchange between an entity and other parties.
Continuity assumption
The concept that businesses will operate into the foreseeable future.
Statement of financial position
Reports assets, liabilities, and shareholders’ equity.
Liabilities
Present obligation to transfer an economic resource as a result of a past event.
Assets = Liabilities + Shareholders’ Equity
The fundamental accounting model.
Note payable
The account that is credited when money is borrowed from a bank.
Historical cost principle
The concept that assets should be recorded at the amount paid on the exchange date.
Account
A standardized format used to accumulate data about each item reported on financial statements.
Dual effects
Every transaction has at least two effects.
Retained earnings
Cumulative earnings of a company that are not distributed to the owners.
Current assets
Economic resources to be used or turned into cash within one year.
Separate-entity assumption
Business transactions are separate from the transactions of the owners.
Debits
Increase assets; decrease liabilities and shareholders’ equity.
Accounts receivable
Amounts owed from customers.
Stable monetary unit assumption
The concept that states that accounting information should be measured and reported in the national monetary unit.
