Accounting Assumptions

Accounting Assumptions are

• the generally accepted way of doing things as an accountant

• the technical definitions, rules and procedures for reporting transactions worldwide

• the suggested ways an accountant may do things

• different in every country

How many Accounting Assumptions are there in the accounting system

• 3

• 2

• 4

• 1

Accounting Assumptions describe the generally agreed principles that underpin the preparation of financial reports

• False

• True

The assumption that states the records of assets, liabilities, and business activities of the entity are kept completely separate from the owner as well as from other entities is the

• going concern assumption

• accrual basis assumption

• entity assumption

• period assumption

The Accounting Entity Assumption is important as it helps to

• record, report and value assets that have occurred and will have an effect in the future

• work out whose financial information is being assessed

• determine which transactions are included or excluded

• define the period of time for which we are reporting

The Going Concern Assumption is important as it helps to

• record, report and value assets that have occured and will have an effect in the future

• work out whose financial information is being assessed

• determine which transactions are included or excluded

• define the period of time for which we are reporting

The Period Assumption is important as it helps to

• record, report and value assets that have occured and will have an effect in the future

• work out whose financial information is being assessed

• determine which transactions are included or excluded

• define the period of time for which we are reporting

The Accrual basis Assumption is important as it helps to

• record, report and value assets that have occured and will have an effect in the future

• work out whose financial information is being assessed

• determine which transactions are included or excluded

• define the period of time for which we are reporting

The Assumption that revenues are recognised when earned and expenses when incurred so profit is calculated as Revenue earnt less expenses incurred is the

• Entity assumption

• Period assumption

• Accrual basis assumption

• Going concern assumption

The Assumption that reports are prepared for a particular period of time, such as a month or a year in order to obtain comparability of results is the

• Entity assumption

• Period assumption

• Accrual basis assumption

• Going concern assumption