GAAPs

Question 1

The owner and business are separate and should be categorized as such

Answer 1

Business Entity Concept (Economic Entity)

Question 2

Records are stated in only monetary measurements, and assumes that measurement is stable across time

Answer 2

Money Measurement Concept

Question 3

Financial statements must be backed by objective evidence

Answer 3

Objectivity Concept

Question 4

Financial statements must be presented yearly, quarterly, or annually.

Answer 4

Time Period Concept

Question 5

Give the same accounting treatment to similar events in each period to facilitate comparisons between accounting periods

Answer 5

Consistency

Question 6

All events that may have an impact on future results should be disclosed in the financial statement in footnotes

Answer 6

Full Disclosure

Question 7

Assumes the operation will run indefinitely, and will not be sold or liquidated. No need to record replacement values or market values for assets.

Answer 7

Continuity Concept (Going Concern)

Question 8

Anticipate no profit, provide all possible losses
Record assets at their lowest possible value
Newer overstate assets or revenues
Never understate liabilities or expenses

Answer 8

Conservatism Concept

Question 9

Always list an asset as the price it was acquired

Answer 9

Cost Principal

Question 10

Revenues are recorded when substantially earned, or products are rendered.

Answer 10

Realization

Question 11

Expenses are matched against the revenues they helped produce.
Expenses are recognized when incurred, regardless of when cash is paid

Answer 11

Matching

Question 12

Items with significant value should be reported in a correct way, immaterial small dollar amounts will be dealt with in a expedient manner.

Answer 12

Materiality