Conventions and Tables Flashcards
What is accounting Entity?
This convention regards a business as having a separate legal existence from that of the owner for accounting purposes. All assets and liabilities of the business must be kept separate from the assets and liabilities of the owner. Business transactions are recorded differently from that of the owner.
What is the Monetary Principle
This convention states that an item must be able to be assigned a monetary value before it can be recorded in the accounting system. In Australia, the financial information of a business must be recorded in Australian currency. Some items are given estimated values so that they can be recorded. (Copyrights, will)
What is the Historical cost principle?
This convention assumes business transactions are recorded in terms of their cost at the time the transactions occurred. This means all transaction record the original monetary value of the item, and no adjustments are made for inflation or loss of value.
What is, accounting period?
This convention requires that the life of a business be divided into equal periods of time for reporting purposes. However, it cannot be longer than a year, and once the accounting period is set it stands indefinite.
What is Materiality?
It refers to the importance of an item to the particular …
omission of this information from an accounting report could influence the investment decisions of the users of the report.
What is the Going concern principle?
The business will exist for the foreseeable future. It is assumed that once a business has commenced operations it will continue operations indefinitely. And there the records will be kept on that basis.
