TLE

Question 1

these are the framework or model that is generally accepted in recording business transactions.

Answer 1

Fundamental concepts

Question 2

hows the independence/individuality of an organization as separate and distinct from one another. ( e.g the finances of the firm are not co-mingled with the finances of the owner.)

Answer 2

Entity Concept

Question 3

shows or stimulates that even if organizations wish to continue until the end of time, for the purpose of accounting and reporting, a cut-off period is set to evaluate the performance of the business, the normal accounting period. ( e.g quarterly or annually)

Answer 3

Periodicity Concept

Question 4

concept assumes that the value of the dollar is stable over time. This concept essentially allows accountants to disregard the effect of inflation – a decrease, in terms of real goods, of what a dollar can purchase. (e.g the U.S dollar )

Answer 4

Stable monetary unit concept

Question 5

these are items that need to be considered in recording transactions (substance over form)

Answer 5

Underlying Assumptions/Hypothesis

Question 6

revenue is recorded when earned, expenses are taken up when incurred.

Answer 6

Accrual Basis

Question 7

any business operates continuously with neither intention nor the need to liquidate; thus, the need to record accumulated excess/income as additional to owner’s equity.( It is assumed that the entity is not intending to close down or significantly reduce its activities.)

Answer 7

Going Concern

Question 8

include relevance and faithful presentation.

Answer 8

Fundamental qualitative characteristics

Question 9

include comparability, verifiability, timeless, and understandability

Answer 9

Enhancing qualitative characteristics