Term
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Definition
| Organization that stands apart as a separate economic unit. |
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Term
Reliability (Objectivity) Principle |
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Definition
| Data are verifiable and objective |
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Term
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Definition
| Acquired assets and services should be recorded at their actual cost |
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Term
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Definition
Economic resources that are expected to benefit the business in the future |
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Term
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Definition
Debts payable to outsiders who are known as creditors |
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Term
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Definition
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Term
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Definition
Asset
Account that holds the amounts of goods or services sold |
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Term
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Definition
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Term
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Definition
Asset
Prepaid amount of money |
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Term
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Definition
Liability
Bill has not been paid yet |
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Term
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Definition
Debits
-Assets, Withdrawals, Expenses
Credits
-Liabilities, Capital, Revenue |
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Term
Transaction Recording Process |
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Definition
1. Identify each accounted affected and its type
2. Determine whether each account has increased or decreased
3. Record the transaction with brief explanation
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Term
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Definition
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Term
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Definition
Assets= Liabilities + Owner's Equity |
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Term
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Definition
-When to record revenue
-The amount to record |
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Term
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Definition
-Measures all expenses incurred during the period
-Matches the expenses against the revenues of the period |
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Term
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Definition
Information is recorded often |
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Term
Two Categories of Adjustments |
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Definition
Prepaid - before expense is paid
Accruals - after expense is paid |
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Term
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Definition
1. Beginning balances
2. Journalize transactions
3. Post
4. Compute the unadjusted balance in each account
5. Enter the trial balance
6. Prepare financial statement
7. Journalize and post the adjusting enteries, close accounts
8. Prepare postclosing trial balance
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Term
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Definition
An account that always has a companion account and whose normal balance is opposite that of the companion account |
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Term
Operating Cycle of a
Merchandising Business |
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Definition
1. company purchases inventory from a vendor
2. Company sells the inventory to a customer
COmpany collects cash from customer
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Term
Perpetual Inventory System |
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Definition
keeps a running record of inventory and cost of goods sold
-constantly (perpetually) updated |
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Term
Periodic Inventory System |
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Definition
Records:
-units purchased
-units sold
-quantity of inventory on hand |
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Term
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Definition
Total liabilities / Total assets |
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