![]() ![]() There are 4 general accounting assumptions, and they are generally related to the financial statement headings: Going-concern assumption: - Presumption that the business will continue operating instead of being closed or sold Money Unit Assumption: - We can express transactions and events in monetary units (i.e. coursenotes library until you contribute 10 documents you ll only be able to view the titles and some teaser text of the uploaded documents there are 100 000 essays dbqs study guides. Disclosures are often in the footnoted to the financial statements. Revenue Recognition Principle: - Governs the timing of revenues recognized on the income statement - Revenue is recognized when earned Expense Recognition Principle (also called the matching principle) – - Governs the timing of expenses reported on the income statement - Expenses are recognized in the same time period as the revenues they help generate Full Disclosure Principle: - A company must report the details behind financial statements that would impact users’ decisions. Governs valuation of assets and liabilities on the balance sheet. There are four types of principles: Measurement principle (also called the cost principle) - Cost is measured on a cash or equal-to-cash basis. ![]() Accounting Notes Chapter 1 External users of accounting information are not directly involved in running the organization EX: Regulator, Shareholder, External auditor, nonexecutive employee, bank lender Internal users of accounting information are directly involved in managing and operating an organization - Internal users are employees with management responsibilities EX: CEO, Marketing manager, executive employee, production manager Principles: Govern the amount and/or timing of information to be reported in financial statements. ![]()
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