GAAP

Question 1

Business Entity Assumption

Answer 1

A business is accounted for separately from its owner or owners.

Question 2

Reliability or Objectivity Characteristic

Answer 2

Financial statement information is supported by independent, unbiased evidence.

Question 3

Benefit vs. Cost Constraint/

Coat constraint

Answer 3

Trade off between accuracy of information and the cost to produce the info

Question 4

Going-Concern Assumption

Answer 4

A business continues operating into the foreseeable future instead of being closed or sold

Question 4

Measurement of the element/

Cost principle

Answer 4

historical cost basis

Financial statements are based on the cost incurred

Question 5

Revenue Recognition of elements

Answer 5

Must
Be likely to generate economic benefit to the business
Cost of item be measured reliably

Question 7

TIME PERIOD PRINCIPLE

Answer 7

activities can be divided into regular, equal and relatively short periods of time.

Question 8

MATCHING PRINCIPLE

Answer 8

Expenses are reported in the same period as the revenues that they help produce

Question 9

CONSERVATISM

Answer 9

select the less optimistic estimate when two estimates of amounts to be received or paid are about equally likely