【正文】 mic entity that keeps its affairs separate from those of the owner(s) ? The reliability (objective) principle – States that accounting records and statements are based on the most reliable data available and documented by objective evidence ACCOUNTING PRINCIPLES AND CONCEPTS ? The cost principle – States that acquired assets and services should be recorded at their actual (historical) cost and should maintain that historical cost for as long as they are owned ? The goingconcern concept – States that the entity will remain in operation for the foreseeable future ACCOUNTING PRINCIPLES AND CONCEPTS ? The stablemoaryunit concept – States that each dollar has the same purchasing power as any other dollar at any other time THE ACCOUNTING EQUATION ? The accounting equation presents the resources of the business and the claims to those resources Economic Resources = Claims to Economic Resources Assets = Liabilities + Owners’ Equity or ? Assets are the economic resources of a business that are expected to be of benefit in the future ? Claims to assets e from – Liabilities ? Economic obligations debts payable to outsiders, called creditors –Owners’ equity (capital) ? Assets held by the owners of the business THE ACCOUNTING EQUATION ? For a corporation, stockholders’ (owners’) equity consists of two main categories – Paidin capital – Retained earnings THE ACCOUNTING EQUATION Assets = Liabilities + Stockholders’ Equity Assets = Liabilities + Paidin Capital + Retained Earnings or ? Paidin (contributed) capital is – The amount invested in the corporation by its owners – Comprised basically of mon stock THE ACCOUNTING EQUATION ? Retained earnings – Is the amount earned by ineproducing activities and kept for use in the business – Is affected by ? Revenues increases in retained earnings from delivering goods or services ? Expenses decreases in retained earnings that result from operations THE ACCOUNTING EQUATION ? Net ine ( earnings) – Total revenues exceed total expenses ? Net loss – Total expenses exceed total revenues ? Dividends – Distributions to stockholders (usually cash) generated by ine THE ACCOUNTING EQUATION Beginning Balance of Retained Earnings + = Net Ine (Loss) for the Period Dividends for the Period Ending Balance of Retained Earnings Revenues for the Period Expenses for the Period = COMPONENTS OF RETAINED EARNINGS Start of the Period End of the Period ? The owners’ equity of proprietorships and partnerships – Makes no distinction between paidin capital and retained earnings – Accounts for the equity of each owner under the single heading of Capital THE ACCOUNTING EQUATION INFORMATION REPORTED ON THE FINANCIAL STATEMENTS Ho w w e l l di d th ec o m pan y per f or mdur