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15 Cards in this Set
- Front
- Back
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Record keeping |
Record keeping is the structured process of collecting and storing information. |
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Bookkeeping |
Bookkeeping in accounting is the systematic recording of financial transactions for accurate financial management and reporting. |
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Internal users |
Management/ owners themselves |
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External users |
Investors, creditors, customers or even government to assess companies stability |
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Cash basis |
Only when the transaction is paid or received |
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Accrual |
When it occurs even if it's not paid or received |
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Transaction |
the exchange of assets, liabilities, or equity, recorded to track a company's financial changes. |
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Accrual transaction for accounting |
Accrual transactions in accounting recognize revenues or expenses before actual payment, providing a more accurate financial picture. |
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What is "GAAP" |
Generally accepted accounting principles |
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GAAP meaning |
standard guidelines for consistent and comparable financial reporting in accounting. |
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Transaction insight |
understanding a transaction's impact on a company's finances. To make an accurate report and decision making |
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Cash accounting for transaction |
Cash accounting for transactions involves recording them when actual cash is received or paid, providing a real-time view of a business's cash flow. ( Smaller enterprise ) |
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How does the accrual accounting method works |
Accrual accounting records revenues and expenses when earned or incurred, offering a more accurate long-term financial view compared to cash accounting. |
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Advantage of accrual basis accounting |
• It allows for more in-depth business analysis. • It helps businesses in financial planning. • This accounting method complies with GAAP |
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Limitations of accrual basis accounting |
• It creates several drawbacks. • It results in deception. • In this method of accounting, moving costs becomes difficult. |
