Tutorial Chapter 1

The accounting principle that states companies and owners should be account for separately:

• Economic entity

• Historical cost

• Going concern

• Revenue recognition

Assets are recorded at their original purchase price according to the

• fair value measurement

• historical cost

• monetary measurement

• consistency

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…..

• expense recognition

• monetary measurement

• historical cost

• materiality

Mr. Ahmad is a wholesaler of plastic goods. In the financial year 2019, Mr. Ahmad decided to change the depreciation method from the straight-line method to the declining balance method.

• Expense recognition

• Consistency

• Revenue recognition

• Going concern

Linah & Co. bought a building worth RM500,000 with expected usage life of 20 years. The accountant of the company recommends that the building to be depreciated for a period of 15 years, as the company is expected to operate within that period only.

• Expense recognition

• Consistency

• Revenue recognition

• Going concern

Financial Statement must be prepared in a specific periods such as months, quarters and years to enable comparison of business performance over time.

• Economic entity

• Objectivity

• Accounting-period

• Going concern

Concept: Revenue is recorded at the same time goods or services are sold.

• realization of revenue

• the revenue principle

• going concern

• historical cost

It helps in knowing actual expenses and actual income during a particular time period.

• Matching Concept

• Accrual Concept

• Revenue Recognition Concept

• Cost Concept

Define bookkeeping.

• the process of recording data

• the process of recording data relating to accounting transactions

• the process of recording data relating to accounting transactions in the accounting books

• the process of recording data relating to accounting transactions in the cash books

Individuals who have started a business on their own.

• Sole Trader

• Business Partner

• Director

• Employee