ACCT 001 Lecture Notes - Lecture 8: Historical Cost, Matching Principle, Income Statement

• School: College of The Sequoias
• Department: Accounting (ACCT)
• Course: ACCT 001
• Professor: williams

Document Summary

Accounting is the process of identifying, measuring and communicating economic information to permit informed judgements and decisions. In order to accomplish the process of accounting, accountants use the following assumptions: Economic entity: financial activities of a business can be separated from the financial activities of the business"s owner. Time period: economic information can be meaningfully captured and communicated over short periods of time: accountants over a period of time must weigh" the business by measuring financial performance regularly. Monetary unit: assumption that the dollar is the most effective means to communicate economic activity. Going concern: assumption that a company will continue to operate into the foreseeable future. Reporting profitability: the statement of comprehensive income (income statement) For obvious reasons, the first question any business would ask itself is, whether it is profitable. What answers this question is the statement of comprehensive income. Revenue: an increase in resources resulting from sale. Revenues are recorded according to the revenue recognition principle.