theories

Question 1

business entity concept

Answer 1

owner & biz are separate entities, only biz transactions are recorded

Question 2

monetary concept

Answer 2

only record transactions that can be measured in monetary terms

Question 3

going-concern concept

Answer 3

assumes business will continue operating instead of being closed/sold.

assets valued at historical cost not at disposable value

Question 4

accounting period concept

Answer 4

presumes the life of a company can be divided into time periods generally a month, quarter or year. fs are prepared at the end of each period.

Question 5

accrual basis of accounting

Answer 5

records revenue when they are earned & expenses when they are incurred regardless of whether cash is received or paid.

Question 6

revenue recognition principle

Answer 6

revenues are recognised in the period which they are earned

Question 7

matching principle

Answer 7

record expenses in the same period as revenues which they can be reasonably associated