Gaap Principles

Question 1

What does it stand for

Answer 1

Generally accepted accounting principles

Question 2

the financial records of the owner and business must be kept separate

Answer 2

The business entity concept

Question 3

: tangible assets are to be recorded at their purchase price.

Answer 3

The historical cost concept:

Question 4

: financial statements are prepared with the assumption that the business will continue to operate for the foreseeable future.

Answer 4

The going-concern concept

Question 5

all incomes earned, and expenses incurred to earn that income must be matched to the same accounting period; AND
Incomes and expenses must be recorded in the year they were earned or incurred.

Answer 5

The matching concept:

Question 6

requires accountants to record liabilities and expenses as soon as they occur, and incomes only when they are earned or assured.

Answer 6

The prudence concept:

Question 7

dictates that any transaction or item that significantly impacts the user of financial statements must be recorded on the statements.

Answer 7

The concept of materiality: