General principles of accounting under IPSAS

Question 1

Going concern

Answer 1

An entity is a going concern and will continue in operation for the foreseeable future.

Question 2

Understandability

Answer 2

readily understandable by users.

Question 3

Relevance

Answer 3

information must be relevant to the decision making needs of users.
Information is relevant when it influences economic decisions by helping users to evaluate past, present or future events or by confirming or correcting their past evaluations.

Question 4

Materiality

Answer 4

Materiality
Information is material if its omission or misstatement could influence the economic decisions or assessments made on the basis of the financial statements.

Question 5

Reliability

Answer 5

free from material error and bias and can be depended upon by users to faithfully represent what it either purports to represent or could reasonably be expected to represent.

Question 6

Comparability

Answer 6

Users must be able to compare the financial statements of an entity through time in order to identify trends in its financial position and performance.

Question 7

Consistency

Answer 7

Accounting rules, practices, concepts and conventions should be continuously observed and applied; i.e., they should not change from one year to another.

Question 8

Fair presentation

Answer 8

Financial statements are frequently described as presenting fairly the financial position, performance and changes in financial position of an entity

Question 9

Prudence

Answer 9

Prudence is the inclusion of a degree of caution in the exercise of professional judgements in making estimates under conditions of uncertainty such that assets or income are not overstated and liabilities or expenses are not understated.

Question 10

Accrual basis

Answer 10

events are recognized when they occur (and not when cash or its equivalent is received or paid), recorded in the accounting records and reported in the financial statements for the financial periods to which they relate