Chapter 6

Question 1

consistency principle

Answer 1

states that a business should use the same accounting methods and procedures from period to period

Question 2

disclosure princple

Answer 2

principle states that a company should report enough information for outsiders to make knowledgeable decisions about the company. Information should be relevant and have faithful representation.

Question 3

materiality concept

Answer 3

states that a company must perform strictly proper accounting only for significant items

Question 4

conservatism principle

Answer 4

states that a company should report the least favorable figures in the financial statements when two or more possible options are presented