Accounting Princibles

Question 0

How many basic accounting rules are there?

Answer 0

10
4 basic principles
4 accounting assumptions
2 constraints

Question 1

What are accounting principles?

Answer 1

They are general GAAP principles for accounting

Question 2

What make up the Accounting principles set up by GAAP?

Answer 2

(4) Basic Principles
(4) Assumptions
(2) Constraints

Question 3

What are basic principles?

Answer 3

Principles that can be used for multi Purposes

Question 4

What are accounting assumptions

Answer 4

Agreed upon rules
There are (2) Categories

(1) General ( long used accounting principles) Basic assumptions, Concepts, and Guidelines you need to prepare for financial statements.
( for external users)
(2) Specific ( for authorities) Detailed rules used in reporting business transactions and events.
( for internal users)

Question 5

How many accounting assumptions are there?

Answer 5

1. Going on
2. Momentary unit
3. Time period
4. business entity

Question 6

What’s going on assumption?

accounting assumption #1

Answer 6

Accountants assume that a business will be around forever so property/ assets are reported at actual cost instead of liquidation( which assumes closure)

Question 7

What’s monetary unit assumption ( assumption #2)

Answer 7

we can convert business transactions an events into monetary ( money/ currency when comparing to other countries)

Question 8

What’s time period assumption ( assumption #3) ?

Answer 8

life of a company ( financial information) can be divided into time units such as week, mo, and year.

Question 9

What’s business entity assumption?(assumption # 4)

Answer 9

that each business has seperate info even from owner an sister stores which is necessary for good business decision making.
Also a business entity can take 3 legal actions

Question 10

What are the 4 basic accounting principles?

Answer 10

1. Measurement
2. Revenue recognition
3. Expense recognition
4. Full Disclosure

Question 11

What’s the measurement( cost) principle.

principle #1

Answer 11

States accounting info is/ needs to be based off actual cost (w/ room for revisions) this principle has 2 parts

Part 1. Cost- measured by how much or what it would be equivalent to ( equal to cash bases which uses reliability, verifiability)

Info based on cost is objectivity

Part 2 Objectivity- info must be supported by independent, neutral evidence ( proof or recipts that state it’s actual cost or cost principle)

Question 12

What’s the rev(sales) recognition principle?

Principle #2

Answer 12

Is the amount from selling products or services that a company receives.

( this principle says when a company must recognize/ record revenue ( sales) )

Question 13

What’s expense recognition ( matching) principle?

principle # 3

Answer 13

A business recognize ( record) expenses needed to get revenue ( sales)

Question 14

What’s full disclosure principle?

principle #4

Answer 14

When a business must report details behind financial statements that would impact users decisions.