Generally Accepted Acounting Principles

Question 0

Business entity

Answer 0

Owner’s personal transaction must be separated from the business transaction

Question 1

Accrual

Answer 1

Income is recognized when it is earned and expense is recognized when it is incurred.

Question 2

Consistency

Answer 2

Similar accounting treatment should be applied to similar item

Question 3

Dual aspect

Answer 3

Every accounting transactions should at least has one debit and one credit entry

Question 4

Going concern

Answer 4

The business is assumed to be in existence in the future

Question 5

Historical cost

Answer 5

Assets on balance sheet should be recorded at the historical cost even though the value has changed

Question 6

Matching

Answer 6

Income and its associated expense should be recorded at the same period of time

Question 7

Materiality

Answer 7

Financial statement should disclose all items enough to affect evaluations and decisions

Question 8

Money Management

Answer 8

Money is used as the basic measuring unit for financial reporting

Question 9

Prudence

Answer 9

Income should not be recognized until it can be ascertained to its realization

Question 10

Objectivity

Answer 10

Accounting information should be verifiable through source documents