Front
What is the basic accounting equation?
Back
Assets = Liabilities + Equity
The foundation of double-entry bookkeeping.
Public Deck
Accounting Basics - 45 Key Concepts
Learn accounting fundamentals with 45 flashcards covering the accounting equation, financial statements, and journal entries.
AnyFlashcards45 cards
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Front
Expanded Accounting Equation
Back
Assets = Liabilities + Common Stock - Dividends + Revenues - Expenses
Shows how net income and distributions affect equity.
Front
Entity Assumption
Back
The business is separate from its owners.
Personal transactions of the owner are not recorded in business books.
Front
Going Concern Principle
Back
The assumption that a company will remain in operation indefinitely.
Allows for the recording of long-term assets and liabilities.
Front
Monetary Unit Assumption
Back
Transactions are recorded in a stable currency.
Assumes the value of the dollar remains relatively constant over time.
Front
Time Period Assumption
Back
The economic life of a business can be divided into artificial time periods.
Usually months, quarters, or years for reporting purposes.
Front
Revenue Recognition Principle
Back
Revenue is recognized when it is earned, regardless of when cash is received.
Key component of accrual-basis accounting.
Front
Matching Principle (Expense Recognition)
Back
Expenses must be recorded in the same period as the revenues they helped generate.
Ensures net income is accurately stated for the period.
Front
Purpose of the Income Statement
Back
To report the profitability of a company over a specific period.
Calculated as Revenues minus Expenses.
Front
Purpose of the Balance Sheet
Back
To report the financial position of a company at a specific point in time.
Lists Assets, Liabilities, and Equity.
+ 35 more cards
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