Inventory is recorded at the lower of cost or net realizable value rather than the expected selling price. This ensures profit on the sale of inventory is only realized when the actual sale takes place.

• Going Concern

• Prudence Concept

• Materiality Concept

• History Cost

The same accounting procedure must be followed in the same way in each accounting period.

• Consistency

• Materiality

• Objectivity

• Conservatism

Financial statements contain all information necessary to understand a business's financial condition.

• Full Disclosure

• Periodicity

• Going Concern

• Objectivity

The revenue from business activities and the expenses associated with earning that revenue are recorded in the same accounting period.

• Matching Principle

• Periodicity

• Historical Cost

• Full Disclosure

An accounting standard can be ignored if the net impact of doing so has such a small impact on the financial statements that a reader of the financial statements would not be misled.

• Materiality

• Objectivity

• Full Disclosure

• Conservatism

Business transactions are reported in numbers that have common values—that is, using a common unit of measurement.

• Money Measurement

• Entity Concept

• Revenue Recognition

• Matching Principle

Financial statements are prepared with the expectation that a business will remain in operation indefinitely.

• Going Concern

• Consistency

• Conservatism

• Matching Principle

GAAP stands for:

• Generally Accepted Auditing Procedures

• Generally Accepted Accounting Principles

• Generally Accepted Accounting Procedures

• Generally Auditing Accounting Principles

The Corona Limited Co. has three plants nationwide that cost a total of P200 million. The current fair value of the plants is P600 million. The plants will be recorded and reported as assets at:

• P200 M

• P400 M

• P600 M

• P800 M

Information is based on actual costs incurred in transactions.

• Business Entity Concept

• Matching Principle

• History Cost Principle

• Full Disclosure