GAAP's

Question 1

Business Entity

Answer 1

Describes the affairs of a specific economic unit engaging in business activities.

Question 2

Cost

Answer 2

Requires that assets are recorded on financial statements at their acquisition value.

Question 3

Objectivity

Answer 3

Requires accounting records be based on objective evidence.

Question 4

Matching

Answer 4

Revenue generated for one accounting period is offset by expenses incurred for the same accounting period.

Question 5

Time Period

Answer 5

Financial statements must use a consistent period of time for recording periods.

Question 6

Disclosure

Answer 6

Information that could affect the decisions of users of financial statements be included when financial statements are prepared.

Question 7

Conservatism

Answer 7

Where there are acceptable alternative accounting treatments for an item, accountants choose the one resulting in a lower net income and net assets.

Question 8

Materiality

Answer 8

Financial facts necessary for proper interpretation of financial statements must be provided with the financial statements.

Question 9

Going Concern

Answer 9

An assumption that a business will operate indefinitely unless specific evidence to the contrary exists.