ACCOUNTING , FAC1502, CHAPTER 1 2023 with verified questions and answers

bookkeeping Involves the identification and recording of economic events. Accounting orderly and systematic identification and recording of the monetary value of the economic transactions of an individual entrepreneur(person) or a business enterprise ( entity or institution) , the reporting on the results of these transactions and the provision of financial information by submitting financial statement which information is used as a basis for decision making. Measurement the process of determining the amount to be disclosed for each item in the financial statement. Historical Cost is the actual amount paid in cash (or cash equivalent) for the particular assets, or the fair value of the item at the time it was acquired. Historical cost of liabilities is the amount of the proceeds recieved in exchange for the obligation, it will be the amount paid to satisfy the liability Current Cost the amount that an entity would have to pay currently to acquire the same type of assest as that which it carries in the normal course of business. Relisable (settlement) value the amount of cash ( or cash equivalent) that will be received currently if the asset is sold ( disposed of) in an ordinary disposal. Present Value the current discounted value of the net cash inflows which the asset should generate in the future in the normal course of business. discounted value The value now for an amount to be received in the future; the amount to be paid now to settle a debt that becomes due in the future. Transaction is an an action where money is paid and in return an item or service, that the buyer needs , is obtained. Accounting entity is any entity for which separate financial records are kept Assets Are present economic resource controlled (used) by the entity, as a result of past events. Equity is the interest which the owner has in the business and which the entity therefore owes to him Liabilities Are present obligations(Debt) of the entity to transfer economic resources(payment) as a result of past events (borrowing or purchasing) Deferred Expense Expense that are incurred but not allocated as expense during a period. Depreciation The systematic allocation of the depreciable amount of an asset over its useful life residual Value Value of the asset which may remain at the end of it's useful life Depreciation amount Is the cost of an asset, or other amount substituted for cost in financial statements, less its residual value Debtors people who owe money Creditors people who are owed money ... ...