Measurement process in accounting, Accounting Basics

Assignment Help:

Earlier we defined accounting as the process of measuring, identifying and communicating economic information to permit informed judgments and decisions by the users of the information. In this segment we focus on the measurement procedure of accounting. Accountants measure a business entity's liabilities, assets and stockholders' equity and any changes that occur in them. By assigning the result of these changes to particular time periods (periodicity) they can find the net income or else net loss of the accounting entity for those periods.

Accountants measure the variety of assets of a business in different ways. They measure cash at its specific amount. Explains how they measure claims to cash such like accounts receivable at their expected cash inflows taking into consideration possible uncollectible. They measure prepaid expenses, inventories, plant assets and intangibles at their historical costs (actual amounts paid). After the acquisition date they carry a few items such as inventory at the lower-of-cost-or market value. Subsequent to the acquisition date they carry plant assets and intangibles at original cost less accumulated depreciation or amortization. They calculate liabilities at the amount of cash that will be paid or the value of services that will be performed to satisfy the liabilities.


Related Discussions:- Measurement process in accounting

Accounting for investments, Contain the relevant authoritative literature o...

Contain the relevant authoritative literature on accounting for investments in held-to-maturity securities using the FASB's Codification Research System. What is the specific citat

Wendell corporation exchanged an old truck, Wendell Corporation exchanged a...

Wendell Corporation exchanged an old truck and $25,500 cash for a new truck. The old truck had a book value of $6,000 (original cost of $25,000 less $19,000 in accumulated depre

What is accounts receivable account, Q. What is Accounts Receivable account...

Q. What is Accounts Receivable account? Envisage a company with an Accounts Receivable account and an Accounts Payable account in its general ledger as well as no Accounts Rece

What do you mean by depreciable asset, Q. What do you mean by depreciable a...

Q. What do you mean by depreciable asset? A depreciable asset is a manufactured asset such like a building, vehicle, machine or piece of equipment that provides service to a bu

State the term - partnership, State the term - Partnership A partnershi...

State the term - Partnership A partnership exists where at least two individuals carry on a business together with intention of making a profit. Partnerships have much in commo

Understand how to account for transportation costs, Q. Understand how to ac...

Q. Understand how to account for transportation costs? FOB terms are particularly important at the end of an accounting period. Goods in transit after that belong to either the

Accounting Information Systems, ABC Insurance Company offers individual aut...

ABC Insurance Company offers individual auto and home insurance servicing the East Coast. The company''s home office is located in Albany, New York. However, ABC Insurance Company

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd