Gaap Principles

Question 1

Consistency

Answer 1

To facilitate compatibly from one year to another

Use the same accounting methods over years

Can change them if justified but still violates

Question 2

Cost Benefit

Answer 2

Putting deprecation on something not meaningful to business would violate

Purchase of escoensive computer to small business also

Question 3

Going concern

Answer 3

A business is expected to continues indefinitely in future unless otherwise stated

Question 4

Historical cost

Answer 4

Assets are normally presented on balance sheet as original cost rather than current value

Question 5

Matching

Answer 5

Expense an item over the period in the item generates revenue

Place expense and reached revenue in same period

Neccitates adjusting entries

Question 6

Materiality

Answer 6

When dealing with insignificant dollar amounts

Is a judgement call

Question 7

Objectivity

Answer 7

Amounts should be reported with document

Question 8

Revenue recognition

Answer 8

Recognize revenue when it has been earned

Question 9

Conservativism

Answer 9

Have a choice of two or more alternative valuations for an item choose the one that will less likely over state assets or income