Accounting Conventions Flashcards
1
Q
Going concern
A
The business will continue to operate in the foreseeable future
A business will be sold for amounts in excess of its cost price and will be replaced
BUT if a business was about to fail they would sell in a hurry at lower price
2
Q
Recognition
A
Occurs when items such as:
Revenue
Expenses
Assets
Liabilities are brought into financial statement
All goods delivered till close of business=purchases for year
Any amounts still paid are trade payables under current liabilities
3
Q
Accruals
A
A charge added to original bill
Current liabilities in financial position
4
Q
Prepayments
A
When money relates to next financial year
Current assets in financial position
