FABM

• Objectivity Principle - the accounting guideline that requires financial statement information to be supported by independent, unbiased evidence other than someone's belief or opinion
• Accounting entity principle - principle that requires every business to be accounted for separately and distinctly from its owner or owners
• Going concern principle - rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold unless evidence shows it
• Historical cost principle - accounting principle that requires all goods and services purchased be recorded at cost?
• Net Assets - another term for equity
• Posting - process of transferring the journal entries to the accounts
• Credited - when amounts of transactions are entered in an account on the right hand side, they are said to be:
• Debit - side of the account increase a cash amount
• Credit - a cash payment is recorded on the cash account as a:
• A credit may result in - an increase in a liability account
• Accounts receivable - asset as business enterprises creates when it maintains accounts for its charge customers
• A debit may signify a decrease in - a liability accouunt
• Compound Journal entry- journal entry that contains more than one debit or credit
• Ledger - a group of related accounts that comprise a complete unit
• Elements of Financial statements - financial statements portray he financial effects of transactions and other events by grouping the into broad classes according to their economic charateristics
• Duality principle transactions and events have a two-fold effect in the elements of Financial statement
• Debit - normal account balance of an owner's drawings
• Accrual Basis - states that a revenue is recorded when it is earned regardless when it is collected and expense is recorded when it is incurred regardless when it is paid