Accounting Principals

Question 1

Going concern

Answer 1

Unless there is evidence to the contrary, it is presumed that company will continue in operation in foreseeable future

Question 2

Accrual

Answer 2

Accounting entries are recognized when they occur, irrespective of payment or collection.

Question 3

Consistency

Answer 3

If there are several options to record transaction, the chosen option needs to be applied consistently to similar transactions over time

Question 4

Prudence

Answer 4

In case of uncertainty, prudent criteria should be applied in making measurements. Do not overestimate the amount of revenues recognized or underestimate the amount of expenses. Be conservative in recording the amount of assets, and not underestimate liabilities. Only record a revenue transaction or an asset when it is certain, and record an expense transaction or liability when it is probable

Question 5

No Offsetting

Answer 5

Unless specifically allowed, assets and liabilities / revenue and expense should be reported separately and not netted

Question 6

Materiality

Answer 6

Strict application of certain accounting principles and criteria may be waived when the materiality of item is of little significance and does not affect fair presentation

Question 7

Ok

Answer 7

Ok