Definitions of important accounting terms
ACCRUAL BASIS OF ACCOUNTING
OBJECTIVITY OF FINANCIAL REPORTING
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ACCOUNTS A device used to provide a record of increases and decreases in each item that appears in a firm's financial statements.
REPORTING ENTITY Entities where it is reasonable to expect the existence of users dependent on general-purpose financial reports for information which will help them to make and evaluate decisions about the allocation of scarce resources.
MATERIALITY TEST Assesses whether omission or misstatement of an item of relevant and reliable information could affect decision-making and the allocation of scarce resources.
EQUITY The residual interest in the assets of an entity after deduction of its liabilities. E = A - L
RELIABILITY Financial information has this characteristic if the ...
In a sentence or two, the response explains each accounting term.