Term
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Definition
| Accounting is done from the perspective of the business |
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Term
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Definition
| Accounting is done in the "common monetary unit" eg. AU dollar |
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Term
| Historical Cost Assumption |
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Definition
| The value of assets (or liablities) is kept as the value of the asset at the time of purchase. eg a car with collector value might go up in price but the price in the ledger stays the same as when the car was originally prurchased |
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Term
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Definition
| Assumption that the business will continue to operate indefinitely |
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Term
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Definition
| Assumption that the accounting process is split into periods eg financial year resulting in balance day adjustments |
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Term
| The four characteristics of information that is to be included in financial reports |
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Definition
-Relevance; Is it relevant to the report?
-Reliability; is it reliable information?
-Comparability; is it the industry standard?
-Understandability; is it within understanding of everyday people. |
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Term
| Title of Income Statement |
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Definition
| Income Statement for year ended 30 June 2008 |
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Term
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Definition
| Balance Sheet as at 30 June 2008 |
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Term
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Definition
| Trial Balance as at June 30 2008 |
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Term
| Internal Accounting Controls |
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Definition
-Reliable personell
-Auditing/verification
-Authorisation by trusted people
-Make personnel aware of responsibilities
-Seperation of Duties; prevents fraud
-Good documentation and records
-Physical Security |
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