J 1. Accrual Basis A system of accounting in which revenues are recognized when earned and expenses are recognized when incurred. H 2. Cost Principle Assets are recorded at the cost to acquire them. E 3. Credit An entry on the right side of an account. D 4. Debit An entry on the left side of an account. A 5. Generally Accepted Accounting Principles (GAAP) The various methods, rules, practices, and other procedures that have evolved over time in response to the need to regulate the preparation of financial statements. C 6. General Ledger A book, file, hard drive, or other devices containing all of a company’s accounts. F 7. Journal A chronological record of transactions, also known as the book of original entry. I 8. Liquidity The ability of a company to pay the debts as they come due. G 9. Matching Principle The association of revenue of a period with all of the costs necessary to generate that revenue. B 10. Materiality The magnitude of an omission or misstatement in accounting information that will affect the judgment of someone relying on the information. Solution J 1. Accrual Basis A system of accounting in which revenues are recognized when earned and expenses are recognized when incurred. H 2. Cost Principle Assets are recorded at the cost to acquire them. E 3. Credit An entry on the right side of an account. D 4. Debit An entry on the left side of an account. A 5. Generally Accepted Accounting Principles (GAAP) The various methods, rules, practices, and other procedures that have evolved over time in response to the need to regulate the preparation of financial statements. C 6. General Ledger A book, file, hard drive, or other devices containing all of a company’s accounts. F 7. Journal A chronological record of transactions, also known as the book of original entry. I 8. Liquidity The ability of a company to pay the debts as they come due. G 9. Matching Principle The association of revenue of a period with all of the costs necessary to generate that revenue. B 10. Materiality The magnitude of an omission or misstatement in accounting information that will affect the judgment of someone relying on the information..