Assumptions and Principles Flashcards
List and describe the assumptions in the conceptual framework. List and describe the principles in the conceptual framework.
1
Q
4 Accounting Assumption
A
- Entity
- Going concern.
- Unite of measurement
- Time period
2
Q
4 Accounting Principles
A
- Revenue recognition
- Expense recognition
- Measurement
- Full Disclosure
3
Q
Recognized & Realized
A
Recognized-Record on the financial statement.
Realized-Cash or near cash is received.
4
Q
historical cost or Net realizable value?
A
When a firm is in liquidation, historical cost and entry values (replacement cost) are no longer relevant.
The going concern assumption supports the historical cost principle. The firm is no longer a going concern. The only amounts relevant are the amounts to be received on sale of the assets. Net realizable value is the net value to be received, after the costs of getting the asset ready for sale are deducted.
