basic accounting theory

Question 1

what is objectivity concept

Answer 1

accounting info recorded must be supported by reliable and verifiable evidence so that financial statements will be free from opinions and biases.

Question 2

what is accrual basis of accounting concept

Answer 2

business activities occured regardless of whether cash has been paid or not should be recorded in relevant accounting period.

Question 3

what is consistency concept

Answer 3

once accounting method is chosen method should be applied to all future accounting periods to enable meaningful comparison.

Question 4

what is prudence concept

Answer 4

accounting treatment chosen should be one that leasts overstates assets and profits and least understates liabilities and losses.

Question 5

what is revenue recognition concept

Answer 5

revenue that is earned when goods have been delivered or service has been provided.

Question 6

examples of invoice

Answer 6

credit purchases or sale

Question 7

example ofdebit note

Answer 7

undercgaregege

Question 8

example of receipt

Answer 8

cash sales recieve money

Question 9

remittance advice

Answer 9

payment to suppliers or cash purchases

Question 10

purpose of trial balance

Answer 10

to facilitate preparation of financial statements

Question 11

limitation of trial balance

Answer 11

balanced trial balance does not mean errors are not present in the books because it does not lrove all transactions are recorded and there is no error in the accounting process.