ADM 1340 Study Guide - Midterm Guide: Deferral, Debt Ratio, Current Liability

• School: University of Ottawa
• Department: Administration
• Course: ADM 1340
• Professor: All

Document Summary

See pages 27-30 in the textbook for all needed theory. The income statement: revenues-expenses= net income (net loss) Statement of retained earnings: beginning retained earnings+ net income- dividends= Balance sheet: assets = liabilities + owners" equity. The entity assumption: an accounting entity is an organization that stands apart as a separate economic unit. The going-concern assumption: the entity will continue to operate in the foreseeable future. The cost assumption: assets and services acquired should be recorded at their actual (historical) cost. The stable-monetary-unit assumption: the dollar"s purchasing power is relatively stable. See pages 118-122 in textbook for all needed theory and know accruals and deferrals. Accrual accounting: recording cash transactions and noncash transactions (i. e. purchases on account). Cash basis accounting: revenue is recorded when case is received, expenses are recorded when incurred. Accrual basis of accounting: revenues are recorded when earned, expenses are recorded when incurred regardless of when cash is received or paid.