Cabangon, Merraquel F

Conceptual Framework of Accounting

Income- is define as the increase in economic benefit during the accounting period in the form of
inflows or enhancement of assets or decrease of liabilities that result in the increase of equity,
other than those relating to contribution from equity participants.

Revenue – is defined as income arising in the course of an entity’s ordinary activities

Contract - is defined as an agreement between two or more parties that creates enforceable
rights and obligation

Contract Asset – is define as an entity right to consideration in exchange for goods and service
that entity has transferred to a customer when that right is conditioned on something other than
the passage of time.

Receivable - is a right to consideration that is unconditional i.e. only the passage of time is
required before payment of the consideration is due.

Contract Liability – is defined as an entity’s obligation to transfer goods and services to a

customer for which the entity received consideration from the customer.

Customer – is defined as a party that has contracted with an entity to obtain goods or service
that are output of the entity ordinary activities in exchange for consideration.

Performance Obligation – is defined as a promise in a contract with customer to transfer to the

customer either:

a. A good or service (or a bundle of goods and service) that is distinct or.
b. A series of distinct goods and services that are substantially the same and that have the
same pattern of transfer to the customer.

Stand Alone Selling Price – is the price at which entity would sell a promise goods or service
separately to a customer. The stand-alone selling price of the distinct goods and services
underlying each performance obligation in the contract is determined at contract inception.
Transaction Price – for a contract with a customer is defined as the amount of consideration to
which an entity expects to be entitled in exchange for transferring promise goods and services to
a customer, excluding amount collected on behalf of third parties.