Accounting Concepts And Principles

Question 1

Uniform set of rules, procedures, practices and standards that are followed in preparing the accountant’s report (financial statements)

Answer 1

Generally Accepted Accounting Principles (GAAP)

Question 2

Requires that assets should be recorded at original or acquisition cost

Answer 2

Cost principle

Question 3

Requires that accounting records should be based on reliable and verifiable data as evidence of transactions

Answer 3

Objectivity principle

Question 4

Dictates practicability to rule over theory in determining the valuation of an item

Answer 4

Materiality principle

Question 5

Combined concept of Revenue recognition principle and Expense recognition principle

Answer 5

Matching principle

Question 6

Revenue is recognized when earned regardless of when received

Answer 6

Revenue recognition principle

Question 7

Expense is recognized when incurred regardless of when paid

Answer 7

Expense recognition principle

Question 8

5 Basic Accounting Assumptions

Answer 8

1. Accounting Entity
2. Going Concern
3. Time-period/ Periodicity
4. Unit of measure
5. Accrual Basis Assumption

Question 9

Business is considered as “an entity that is separate and distinct from the owner or management”

Answer 9

Accounting Entity

Question 10

Financial statements are normally prepared on the assumption that the entity will continue operations for the foreseeable future

Answer 10

Going concern

Question 11

The indefinite life of an entity is subdivided into time periods or accounting periods which are usually equal length for the purpose of preparing financial reports

Answer 11

Time-period

Question 12

Peso

Answer 12

Unit of measure