Accounting 11 - Chapter 5.2

Front 1

the two new conclusions of the equity transactions are

Back 1

revenues are normally credited

drawings and expenses are normally debited

Front 2

revenues bring assets to the business giving the owner

Back 2

more to claim (equity credit)

Front 3

drawings and expenses have the ultimate effect of taking assets out of a business giving the owner

Back 3

less to claim (equity debit)

Front 4

the revenue recognition principle was a

Back 4

longstanding feature of the canadian generally accepted accounting principles (canadian GAAP)

it continues to be prominent in the international financial reporting standards (IFRS)

Front 5

define revenue recognition principle

Back 5

requires revenue to be recorded in the accounts at the same time the transaction is completed

Front 6

usually the principle means

Back 6

simply crediting the account when the bill or invoice(bill) is sent to the customer

Front 7

if no significant commitment of the customer paying is made

Back 7

credit to the revenue

Front 8

the seller earns the right to send bill

Back 8

by providing services or goods

Front 9

the corresponding

Back 9

debit will be made to bank if dealing with cash sale, or to A/R if dealing with credit sale

Front 10

when do you debit revenue

Back 10

when the customer pays, and you have not done your service

in this case you debit bank and create and A/P

Front 11

if revenue are not taken into account correctly,

Back 11

the income statements of the company will be incorrect and the readers of the income statement will be misinformed

Front 12

the creditors claim takes

Back 12

priority over the owners

Front 13

even though no assets have left the business,

Back 13

there is still a/p to creditor and decrease in expense

Front 14

the funds withdrawn reduce

Back 14

the investment the owner has made in the business

Front 15

what are some other transactions that affect drawings

Back 15

the owner takes assets other than cash from the business for personal use

the owner collects a debt from a customer and keeps the money for personal use

Front 16

define fiscal period

Back 16

also called financial period or accounting period

it is the period of time over which earnings are measured

Front 17

if you buy a computer online with a credit card

Back 17

the seller does not wait until it is delivered before recognizing revenue

Front 18

the IFRS allows the seller to recognize revenue at the time

Back 18

of the sale without having to wait for delivery

Front 19

as long as

Back 19

it is probable that the delivery will be made

the item is on hand, identified, and ready to be delivered

the buyer is aware of delayed delivery

the usual payment terms apply

Front 20

define time period concept

Back 20

an accounting standard that provides that accounting will take over specific time periods known as fiscal periods

Front 21

the two important steps to separating revenues and expenses to fiscal periods are

Back 21

record proper revenue in proper period

must subtract only those expenses that helped earn the revenue they recorded in step one

Front 22

define matching principle

Back 22

principle that states that each expense item related to revenue earned must be recorded in the same period as the revenue it helped to earn

Front 23

revenue will have a credit account because

Back 23

revenues bring assets into a business giving the owner more to claim ( equity credit)

Front 24

before sending an invoice to a customer,

Back 24

the seller must fulfill its obligations to provide the promised goods or services