Accounting Concepts and GAAP

The standards and rules that accountants follow while recording and keeping financials.

• Ethics

• Financial Statements

• GAAP

• SEC

The __________concept states that businesses should be treated as if they will continue to stay in business.

• going concern
• business entity

The accounting principles that states companies and owners should be account for separately..

• Business entity concept
• Going concern concept

Switching accounting principles every year would violate the

• full disclosure principle
• consistency principle

Recording expenses and revenues in the same period in which they occur..

• Matching principle
• Historical cost principle

Concept of consistency means :

• all the firm in the same industry should be identical accounting principles and procedures

• all principle and procedures of accounting are utilised

• accounting principles and methods should remain consistent from one year to another

• all of the above

The cost of a small calculator is accounted as an expense and not shown as an asset in financial statement of a business entity due to…..

• materiality concept
• matching concept
• periodicity concept
• principle of full disclosure

According to principle of conservatism :

• provision is made for bad and doubtful debts
• depreciation is charged on assets
• recording is made of outstanding expenses
• all of the above

According to the cost concept

• assets are recorded at lower of cost and market value
• assets are recorded by estimating the market value at the time of purchase
• assets are recorded at the value paid for acquiring it
• assets are not recorded

Which principle/guideline requires the company's financial statements to have footnotes containing information that is important to users of the financial statements?

• Historical Principle
• Business Entity
• Accrual Principle
• Adequate disclosure Principle