Untitled Flashcards Set

GAAP

Generally Accepted Accounting Principles, used to guide accountants in ensuring accurate and consistent accounting practices.

Business Entity Concept

A principle stating that a business’ transactions are distinct from its owner or owners.

Going Concern Concept

Assumes that a business will continue to operate into the foreseeable future.

Cost Principle

The value of an item remains at the value that was paid for it, regardless of changes in market value.

Objectivity Principle

Accounting must be done in a way that ensures two different people can derive the same results, free from personal bias.

Principle of Conservatism

Accountants should use methods and estimations that avoid overstating or understating accounting records.

Materiality Principle

Accountants must include all information that is important to users of financial information.

Consistency Principle

Businesses are required to apply the same accounting practices consistently across their records.

Assets

Items of value owned by an individual or business that can include cash, supplies, equipment, and property.

Liabilities

Debts that must be paid back to creditors and suppliers, including loans and accounts payable.

Owner's Equity

The net worth of an individual or business, representing the capital invested by the owner.