Term
| Measurement Principle (Cost Principle) |
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Definition
- Information is based on actual cost.
- Measured in cash exchanged or cash value of goods/services exchanged. |
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Term
| Revenue Recognition Principle |
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Definition
Provides guidance on when a company must recognize (record) revenue.
Has 3 Important Concepts:
(1) Revenue is recognized when earned
(2) Proceeds from selling products and services need not be in cash
(3) Revenue is measured by the cash received plus the cash value of any other items received |
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Term
| Expense Recognition Principle (Matching Principle) |
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Definition
| Prescribes that a company record the expenses it incurred to generate the revenue reported. |
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Term
| Full Disclosure Principle |
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Definition
| Prescribes that a company report the details behind financial statements that would impact users' decisions |
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Term
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Definition
| Accounting information reflects a presumption that the business will continue operating instead of being closed or sold |
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Term
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Definition
| Transactions and events can be expressed in monetary, or money, units |
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Term
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Definition
| Presumes that the life of a company can be divided into time periods, such as months and years, and that useful reports can be prepared for those periods. |
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Term
| Business Entity Assumption |
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Definition
| A business is accounted for separately from other business entities, including its owner |
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