Generally Accepted Accounting Principle (GAAP)

Question 1

Separation of personal and business identity
(The money you put in your business is not your money)

Answer 1

Entity concept

Question 2

Planning as if the business will live forever

Answer 2

Going concern

Question 3

an organization can report its financial statements within certain selected periods of time

Answer 3

Periodicity concept

Question 4

an accounting concept that requires transactions to be recorded in the time period in which they occur, regardless of when the actual cash flows for the transaction are received

Income is earned when service is rendered regardless of when cash is collected

Answer 4

Accrual principle

Question 5

the process of collecting all revenues which are earned during the accounting period and matching these revenues with the expenses incurred to produce those revenues

“No pain, no gain”
“No guts, no glory”

Answer 5

Matching of revenue and cost

Question 6

business transactions should only be recorded if they can be expressed in terms of a currency. In other words, anything that is non-quantifiable should not be recorded a business’ financial accounts

Answer 6

Monitary unit

Question 7

Impact of the financial report (info) to make business decisions or economic decisions to the users

Answer 7

Relevance

Question 8

It affects the financial info to the users to make business or economic decisions it depends on the degree of the amount in the value in it

100. Material 100k. Not material
     - 50. - 50
101. 499,950

Answer 8

Materiality

Question 9

Be truthful to your expenses or be specific

Answer 9

Faithful representation

Question 10

Never assume/expect to gain, but always provide for loses

“Never expect that you will always win”

Answer 10

Conservation

Question 11

Accounting items are designed to understand by the users

Answer 11

Understandability