GAAP's

Question 1

Principal of Conservation

Answer 1

Provides

-accounting for a business must be fair and reasonable.

Question 2

Objectivity Principal

Answer 2

States

• accounting will be recorded on fact
• not personal opinions or feelings

Question 3

Revenue Recognition Convention

Answer 3

Provides

-revenue is taken into accounts when the transition is completed.

Question 4

The Matching Principal

Answer 4

States

-each expense item related to revenue must be recorded in the same accounting period.

Question 5

Time Period Concept

Answer 5

Provides

• accounting takes place over a specific time period
• called a focal period.

Question 6

Cost Principal

Answer 6

States

• accounting for purchases must be at their cost price.
• this is the figure that appears on re source document.

Question 7

The Consistency Principal

Answer 7

Requires

-accountants to apply the same methods and procedures from one period to the other.

Question 8

Materiality Principal

Answer 8

Requires
-Accountants to use GAAP's except when to do so would be: 
>expensive 
>difficult
> or won't make a difference

Question 9

Full Disclosure Principle

Answer 9

States

>that any information that affects the understanding of a company’s financial position must be included in statements.

Question 10

Continuing Concern

Answer 10

Assumes

-that a business will continue to operate until specified otherwise.