Term
| Primary Objective of External Financial Reporting |
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Definition
| Provides useful economic information about a business to help external parties make sound financial decisions. |
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Term
| Separate-Entity Assumption |
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Definition
| States that business transactions are separate from the transactions of the owners. |
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Term
| Unit-of-Measure Assumption |
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Definition
| States that accounting information should be measured and reported in the national monetary unit. |
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Term
| Continuity (Going Concern) Assumption |
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Definition
| States that businesses are assumed to continue to operate into foreseeable future. |
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Term
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Definition
| Resources with probable future economic benefits owned by the entity as a result of past transactions. |
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Term
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Definition
| Assets that will be used or turned into cash within one year. Inventory is always considered a current asset regardless of the time needed to produce and sell it. |
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Term
| Historical Cost Principle |
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Definition
| Requires assets to be recorded at the historical cash-equivalent cost, which on the date of the transaction is cash paid plus the current dollar value of all noncash considerations also given in the exchange. |
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Term
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Definition
| Probable debts or obligations of the entity that result from past transactions, which will be paid with assets or services. |
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Term
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Definition
| Obligations that will be paid in cash (or other current assets) or satisfied by providing cash, goods, or services within the coming year. |
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Term
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Definition
| The financing provided by the owners and by business operations. |
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Term
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Definition
| Results from owners providing cash (and sometimes other assets) to the business. |
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Term
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Definition
| Refers to the cumulative earnings of a company that are not distributed to the owners and are reinvested tint the business. |
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Term
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Definition
(1) An exchange between a business and one or more external parties to a business
(2) A measurable internal event such as the use of assets in operations |
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Term
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Definition
| A standardized format that organizations use to accumulate the dollar effect of transactions on each financial statement item. |
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Term
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Definition
| The process of studying a transaction to determine its economic effect on the business in terms of the accounting equation. |
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Term
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Definition
| An accounting method for expressing the effects of a transaction on accounts in a debits-equal-credits format. |
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Term
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Definition
| A tool for summarizing transaction effects for each account, determining balances, and drawing inferences about a company’s activities. |
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