Question

Listed as follows are eight technical accounting terms introduced in this chapter. Realization principle Credit Time period principle Accounting period Matching principle Expenses Net income Accounting cycle Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the term described, or answer "None" if the statement does not correctly describe any of the terms. The span of time covered by an income statement. The sequence of accounting procedures used to record, classify, and summarize accounting information. The traditional accounting practice of resolving uncertainty by choosing the solution that leads to the lowest amount of income being recognized. An increase in owners’ equity resulting from profitable operations. The underlying accounting principle that determines when revenue should be recorded in the accounting records. The type of entry used to decrease an asset or increase a liability or owners’ equity account. The underlying accounting principle of offsetting revenue earned during an accounting period with the expenses incurred in generating that revenue. The costs of the goods and services used up in the process of generating revenue.

Answer 1

Answer:

1) Accounting period (2) Accounting cycle (3) None (4) Net income (5) Realisation principle (6) Credit (7) Matching principle (8) Expenses

Explanation:

Accounting period : This is the period of time in which the preparation of income statement must covered. The business community and users of finnancial statements require that the business be divided into accounting period (yearly or quarterly ) so that the position of the business can be measured over those period.

Accounting cycle : This shows the sequence of account that must be prepared in order to record, classify, and summarize accounting information. The cycle starts with the recording of the transaction, jounalizing the transaction, posting the transaction to the ledger, preparation of trial balance from the ledger in order to check the arithmetical accuracy of entries in the ledger, and the preparation of financial statement from the trial balance.

Net income : This is used for the recording of operations of the business to determine the profitability of the business. When there is an increase in owners equity resulting from profitable operations it is known as Net income.

Realization principle : This principle established the rule for the periodic recognition of revenue as soon as it is capable of objective measurement, and the value of asset received or receivable in exchange is reasonably certain. It is possible to recognize revenue at a variety of points.

Credit : This is used to show the decrease in asset or increase in liability or owners equity account.

Matching principle : This principle states that expenses and revenue should be assigned to their correct accounting period. It states that all expenses earned during the financial period either paid for or unpaid and all income earned either received or not received must be recorded and treated in that financial period.

Expenses: This is the amount of money spent in the performance of business activities, example of these is the cost of goods and services used up in the process of generating revenue for the business.