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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Exercise 1-35 Accounting Concepts OBJECTIVE 06°

A list of accounting concepts and related definitions is presented below.

Concept Definition

1. Revenue a. Owner’s claim on the resources of a company

2, Expense b. The difference between revenues and expenses

3. Net income (1055) c. Increase in assets from the sale of goods or services

4, Dividend d. Economic resumes of a company

5. Asset e. Cost of assets consumed in the operation of a business

6, Liability f. Creditors' claims on the resources of a company

7. Stock holders’, equity g. Distribution of earnings to stockholders

Required:

Match each of the concepts with its corresponding definition

To determine

Concept Introduction:

Financial statements: Financial statements are prepared to summaries the account at the end of the period. The statements prepared are Income statement, Balance sheet, Statement of owner’s equity and Cash flows statements.

To Indicate:

The correct definition for each of the given concept.

Explanation

The correct definition for each of the given concepts is as follows is identified as follows:

    Concept Definition
    1. Revenue c.Revenue is an increase in assets from sale of goods/ services
    2. Expensee. Expenses are costs of assets consumed in the operations of the business
    3. Net Income (Loss)b. Net income (loss) is the difference between the revenue and expenses
    4...

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