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In this chapter, you will learn how to: LO1 – Define accounting. LO2 – Identify and describe the forms of business organization. LO3 – Identify and explain the Generally Accepted Accounting Principles (GAAP). LO4 – Identify, explain, and prepare the financial statements.
- Liabilities and Equity
- $3,335
- 2,500
Jun 23, 2023 · LO1 – Define accounting. LO2 – Identify and describe the forms of business organization. LO3 – Identify and explain the Generally Accepted Accounting Principles (GAAP). LO4 – Identify, explain, and prepare the financial statements. LO5 – Analyze transactions by using the accounting equation.
- Principles and Concepts of Accounting
- Going Concern
- Accrual Basis
- Materiality
- Consistency
- Prudence
- Duality
For the purposes of the FA2 exam, there is a list of principles and concepts of accounting which you need to be familiar with and which can be found in learning outcome A1(a) in the study guide: 1. Going concern 2. Accrual basis 3. Materiality 4. Consistency 5. Prudence 6. Duality (dual aspect) 7. Business entity 8. Historical cost What candidates ...
Definition: ‘Financial statements are normally prepared on the assumption that the reporting entity is a going concern and will continue in operation for the foreseeable future. Hence, it is assumed that the entity has neither the intention nor the need to enter liquidation or to cease trading. If such an intention or need exists, the financial sta...
The Conceptual Framework refers to ‘accrual accounting’, also known as ‘the accruals concept’ or simply as ‘accruals.’ Definition: ‘Accrual accounting depicts the effects of transactions and other events and circumstances on a reporting entity’s economic resources and claims in the periods in which those effects occur, even if the resulting cash re...
Definition: ‘Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial reports make on the basis of those reports, which provide financial information about a specific reporting entity.’ There are some key issues within this definition that...
Definition:‘The use of the same methods for the same items, either from period to period within a reporting entity or in a single period across entities.’ Consistency is a straightforward principle and is intended to enhance financial reporting by making it easier for users to make comparisons. In that sense it contributes to the achievement of com...
Definition: ‘The exercise of caution when making judgements under conditions of uncertainty. The exercise of prudence means that assets and income are not overstated and liabilities and expenses are not understated. Equally, the exercise of prudence does not allow for the understatement of assets or income or the overstatement of liabilities or exp...
‘Duality’ refers to the fact that every transaction has a ‘dual aspect’ and therefore requires the use of ‘double entry’ accounting. Double entry is often easier to do than to explain. For this reason, candidates would be wise to complete as many practice questions as possible before taking the exam. It is also the reason why the topic can only be ...
Jun 24, 2024 · Accounting is the process of recording financial transactions pertaining to a business. The accounting process includes summarizing, analyzing, and reporting these transactions...
- Jason Fernando
- 2 min
Have you ever wondered how businesses keep track of their financial health? How do they ensure transparency and accountability in their financial dealings? The answer lies in the fascinating realm of financial accounting.
These two definitions of cost are important for distinguishing between two conceptions of profit, accounting profit, and economic profit. Accounting profit is a cash concept. It means total revenue minus explicit costs—the difference between dollars brought in and dollars paid out.
Sep 4, 2024 · Financial accounting is the framework that dictates the rules, processes, and standards for financial recordkeeping. Nonprofits, corporations, and small businesses use financial accountants to...
