Accounting assumptions

Question 1

Entity Assumption

Answer 1

The requirement that the business has its own financial status and a separate position from that of its owner or other entities.

Question 2

Accrual basis Assumption

Answer 2

Recording revenue when its earned, and expenses when they are incurred.

Question 3

Going concern assumption

Answer 3

Financial reports are to recorded as if the business was continuing to operate, and is not expected to be wound up in the future.

Question 4

Period assumption

Answer 4

Financial activities are recorded and reported consistently for a particular period of time.