Fucking concepts and principles

Question 1

Matching concept

Answer 1

Link revenue with relevant expenses and costs

Question 2

Historical cost principle

Answer 2

Assets should be valued at purchase or production cost, no matter changes in market value

Question 3

Prudence concept

Answer 3

Ensure assets or revenues are not overstated; liabilities and expenses are not understated

Question 4

Accrual concept

Answer 4

Revenues and expenses are recognised when earned or incurred

Question 5

Going concern principle

Answer 5

The business will continue to operate in a foreseeable future

Question 6

Realisation principle

Answer 6

Revenue is recorded only goods are dispatched and accepted by customers

Question 7

Materiality concept

Answer 7

Information is material if its omission or misstatement could influence users’ decision

Question 8

Business entity concept

Answer 8

Transaction of an entity is accounted separately from transaction of other entities

Question 9

Consistency concept

Answer 9

Accounting treatment of similar items should be the same