Principles of Accounting- Accounting Concepts

The separate entity concept states that we should always separately record the transactions of a business and its owners.

• True

• False

The matching and accrual concept is also useful in case there is a legal judgment against a business, since the owner does not want to have personal assets intermingled with those of the business, and therefore subject to forfeiture.

• False

• True

In the Principle of prudence, one should be conservative in recording the amount of assets, and not underestimate liabilities. The result should be conservatively-stated financial statements.

• False

• TRUE

Principle of matching and accrual this means that the accountant will be cautious about declaring profits of the business but will also anticipate and help businesses provide for losses.

• False

• True

Principle of consistency means that the accountant will follow chosen policies every time reports are made unless there is a good reason to change them.

• True

• False

Principle of matching and accrual- the accountant will report on profits and losses and the value of assets and liabilities after having matched revenue and profits with the costs and losses incurred in earning them.

• False

• True