Topic 1: Accounting Concept

Front

Accrual theory describes recording income and expenses when earned or incurred, regardless of payment.

Back

Income earned and expenses incurred recorded regardless of payment.

Front

Accounting period theory:

Back

Life of a business divided into regular time periods.

Front

Accounting theory that mandates recording personal asset withdrawals as drawings.

Back

Accounting entity theory

Front

Accounting theory valuing inventory at lower of cost or net realizable value.

Back

Prudence theory

Front

Objectivity theory: Transactions recorded based on reliable evidence.

Back

Transactions are recorded based on reliable evidence.

Front

Historical cost theory:

Back

Transactions recorded at original cost.

Front

Identify this accounting theory: Business activities are separate from the owner's actions, with transactions recorded from the business's perspective.

Back

Accounting Entity

Front

Identify the accounting theory: A business is assumed to have an indefinite economic life unless credible evidence suggests it may close.

Back

Going Concern

Front

Assumption that a business will continue operating into the future.

Back

Going Concern Assumption

Front

Assumption for recording items at original purchase price.

Back

Historical cost assumption