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Accouting entity assumption
If the transactions of an entity are to be recorded, classified, and summarised into financial statements, the accountant must be able to identify clearly the boundaries of the entity being accounted for.
Accounting equation
Assets = Liabilities + Equity
Accounts payable
Amounts owed to suppliers for goods or services purchased on credit.
Accounts receivable
Although income often is measured by the cash received, it may be measured by the receipt of other assets, such as promises by customers to pay in the future or the receipt of property from a customer.
Accrual basis
The effects of all transactions and events are recognised in accounting records when they occur, and not when the cash is received or paid. Hence, financial statements report not only on cash transactions but also on obligations to pay cash in the future and on resources that represent receivables of cash in future.
Assets
Resources controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.
Balance sheet (statement of financial position)
The financial position of an entity or division at a specific point in time is reported.
Company (or corporation)
A separate legal entity formed under the Corporations Act 2001.
Comparability
The quality of information that enables users to identify similarities in and differences between two sets of economic data.
Consistency
Use of the same accounting policies and procedures, either from period to period within an entity or in a single period across entities.
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