ECON 1010 Study Guide - Management Accounting, Financial Accounting, Income Statement

• School: York University
• Department: Economics
• Course: ECON 1010
• Professor: Steven Edwards

Document Summary

1. in determining net income (revenue - expenses) on the accrual basis, revenue is recognized when earned rather than when cash is collected, and expenses are recognized when goods and services are used rather than when they are paid for. 2. owners" equity can be increased by contributions from owners and by revenue. It can be decreased by withdrawals and expenses. Only revenue and expenses are used in determining net income. 3fundamental concepts underlying the accounting process include the following: Accounting entity-each business venture is a separate unit, accounted for separately. Historical cost-assets are reported at acquisition prices and are not adjusted upward. Objectivity-where possible, recording of transactions should be supported by verifiable evidence. Going concern-the assumption is made in accounting that a business will continue indefinitely. Measuring unit-conventional accounting statements are expressed in money amounts, unadjusted for changes in the value of the dollar.