Revenue Recognition and Expense Recognition definitions Flashcards
Revenue Recognition and Expense Recognition definitions
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Revenue Value received from providing goods or services central to a company's main business activities. Expense Value of goods or services consumed or received to help generate revenue during a period. GAAP Set of standardized accounting rules in the U.S. guiding when and how financial transactions are recorded. Revenue Recognition Principle Guideline requiring income to be recorded when goods or services are delivered, regardless of payment timing. Matching Principle Rule requiring costs to be recorded in the same period as the revenues they help produce. Accrual Accounting Method where transactions are recorded when earned or incurred, not necessarily when cash changes hands. Cash Basis Accounting System where transactions are recorded only when cash is received or paid. Accounts Receivable Amounts owed by customers for goods or services already delivered but not yet paid for. Liability Obligation to pay for goods or services already received, often arising when payment is deferred. Asset Resource owned or controlled by a company, such as supplies, that can provide future economic benefit. Cash Inflow Money received by a business, typically from customers in exchange for goods or services. Transaction Economic event involving the exchange of goods, services, or obligations between parties. Period Specific span of time, such as a month or year, used for reporting financial results. Benefit Advantage or value received from goods or services, determining when expenses should be recorded. Supplies Consumable items used in operations, recognized as expenses when utilized during a reporting period.
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