• records revenues when earned and expenses when incurred, regardless of the timing of cash receipts or payments.   

•  records revenues when cash is received and expenses when cash is paid.   

•  are decreases in assets or increases in liabilities from ongoing operations incurred to generate revenues during the period.
• resources used to produce revenue
• includes cost of goods sold, rent expense, interest expense, depreciation expense, advertising expense, insurance expense, repair expense, income tax expense

• are increases in assets or decreases in liabilities from peripheral transactions.  

• are decreases in assets or increases in liabilities from peripheral transactions. 

•  requires that expenses be recorded when incurred in earning revenue.  
  

• is the time it takes for a company to pay cash to suppliers, sell goods and services to customers, and collect cash from customers.

• are increases in assets or settlements of liabilities from ongoing operations.
• sources of funds
• amount derived from all sales to customers
• includes sales revenue, fee revenue, interest revenue, rent revenue

•  states that revenues are recognized when (1) goods or services are delivered, (2) there is persuasive evidence of an arrangement for customer payment, (3) the price is fixed or determinable, and (4) collection is reasonably assured.  
  

• indicates that the long life of a company can be reported in shorter time periods.

Net Income

• = Revenues- Expenses

• cost of inventory sold to customers during a period

• current asset/ liability changes
• relate to receipts of cash from customers, payments to suppliers (employees, utilities, and other suppliers of goods and services for operating the business), and any interest paid or investment income received.

• purchasing and selling fixed (long-term) assets
• relate to purchasing/selling investments or property and equipment or lending funds to/receiving repayment from others.

• longterm liabilities, change in owner's equity
• relate to borrowing or repaying banks, issuing stock to investors, repurchasing stock from investors, or paying dividends to investors.