Week 4 Flashcards
What are the Two most significant influences of the form and content of a financial report?
- Traditional accounting conventions and doctrines that have underpinned accounting practice for decades
- Continued development of professional and statutory accounting standards
What does the acronym GAAP stand for?
generally accepted accounting principles
What accounting convention is being described?
‘For accounting purposes, the business and its owner(s) are treated as separate and distinct’
Business Entity Convention
What accounting convention is being described?
‘Assets should be recorded at their historic (acquisition) cost or equivalent’
Historic Cost convention
What accounting convention is being described?
‘Holds that caution should be exercised when making accounting judgements; often means anticipating losses but only recognising realised profits’
Prudence Convention
What accounting convention is being described?
‘Assumption that the business will continue operations for the foreseeable future, i.e. no intention or need to liquidate the business’
Going Concern (continuity) Convention
What accounting convention is being described?
‘Each transaction has two aspects and each aspect must be recorded in the financial statements’
Dual Aspect Convention
What accounting convention is being described?
‘Accounting should only deal with those items which are capable of being expressed in monetary terms’
Money Measurement Convention
What accounting convention is being described?
‘Money, the unit of measurement, will not change in value over time’
Stable Monetary Unit Convention
Is the following statement true or false?
‘Non-current assets have lives that are either finite or indefinite’
True
Is the following statement true or false?
‘Non-current assets can only have lives that are indefinite’.
False.
