GAAPs

Question 1

Business Entity

Answer 1

a business’ financial information is recorded and reported separately from the owner’s personal financial information

Question 2

Going Concern

Answer 2

financial statements are prepared with the expectation that a business will remain in operation indefinitely

Question 3

Accounting Period Cycle

Answer 3

changes in financial information are reported for a specific period of time in the form of financial statements

Question 4

Objective Evidence

Answer 4

each transaction is described by a business document that proves the transaction did occur

Question 5

Unit of Measurement

Answer 5

all business transactions are recorded in a common unit of measurement

Question 6

Realization of Revenue

Answer 6

revenue from business transactions is recorded at the time goods or services are sold

Question 7

Matching Expenses with Revenue

Answer 7

revenue from business activities and expenses associated with earning that revenue are recorded in the same accounting period

Question 8

Historical Cost

Answer 8

the actual amount paid or received is the amount recorded in accounting records

Question 9

Adequate Disclosure

Answer 9

financial statements should contain all information necessary for a reader to understand a business’ financial condition

Question 10

Consistent Reporting

Answer 10

in the preparation of financial statements, the same accounting concepts are applied in the same way in each accounting period

Question 11

GAAP

Answer 11

Generally Accepted Accounting Principles