Key Accounting Principles and Concepts

These flashcards cover key accounting principles, assumptions, internal control components, account classifications, and financial formulas.

What is the Revenue Recognition Principle?

Record revenue when it is earned.

Which principle requires matching expenses to revenues of the same period?

Matching Principle.

What does the Full Disclosure Principle require?

To disclose all important information.

What does the Monetary Unit Assumption state?

Use stable currency.

What is the Economic Entity Assumption?

Keeping business separate from its owner.

What are the components of Internal Control outlined in the COSO framework?

Control environment, risk assessment, control activities, information and communications, and monitoring.

What is the normal balance for Cash?

Debit.

What is the classification and normal balance for Accounts Receivable?

Asset; Debit.

What is the normal balance for Accumulated Depreciation?

Contra Asset; Credit.

What type of account is Accounts Payable, and what is its normal balance?

Liability; Credit.

What is the standard formula for Cost of Goods Sold?

Cost of Goods Sold = Goods Available for Sale - Ending Inventory.

What is the normal balance for Salaries Expense?

Expense; Debit.