Accounting Principles

Question 1

The objectivity principle

Answer 1

States that accounting will be recorded on the basis of objective evidence. This means the accounting entries will be made on fact, source documents, and not on personal opinion or feeling.

Question 2

The business entity concept

Answer 2

The accounting, for a business organization must be kept separate from the personal affairs of the customer

Question 3

The continuing concern concept

Answer 3

Assumes that a business will continue to operate, unless it is known that it will not

Question 4

The cost principle

Answer 4

accountants must record the value of the assets at their cost price

Question 5

The valuation model

Answer 5

outlines an accounting procedure that allows accountants to change that value of the asset on the balance sheet, if market value increases

Question 6

The revenue recognition principle

Answer 6

Requires revenue to be recorded in the accounts at the time the transaction is completed

Question 7

The matching principal

Answer 7

Expenses must be recorded in the period they helped earn revenue

Question 8

time period concept

Answer 8

accounting will take place over specific time. Known as fiscal. Cannot be longer than a year and must be consistent.

Question 9

According to the accounting principle in the situation of Bobby’s uniform rentals just sold $500 on account to Southlake Hospital on February 22, 2020 Southlake plans to pay the bill on March 8, 2021. Should Bobby’s uniform record the transaction why

Answer 9

revenue recognition principle

According to the revenue, recognition principle and accounting revenue, should be recognized when it is earned recording the sale on February 22nd 2020 lines with the principle of recognizing revenue, when a company has satisfied its performance obligation

Question 10

Using an accounting principle in the situation of an owner, wanting an accountant to record the owners personal cottage as an asset on the business balance sheet what should the accountant do and why

Answer 10

The accounting principle would be business entity concept

As financial transactions and resources of the business should be kept distinct from personal transaction and assets of owners 

Question 11

using un accounting principle in the situation of an accountant receiving the bill for January is Hydro costs on February 10 Bobby’s uniform rentals has a year end of January 31. What date should he record the transaction on and why

Answer 11

matching principal

In this situation that accountant should record the transaction on the date when the expense was insured, which is in January the principal states that expenses should be recognized in the same accounting. As the related revenues in this case, Hydro cost for January relate to the business operations in January, even though the bill was received in February, the expenses should be recognized, which occurred