Matching
Match the descriptions by entering the proper letter in the space provided with the accounting terms.
Premises:
This is the nongovernmental sector of society. In an accounting context it is the business sector, represented in the accounting rule-making process by the Financial Accounting Standards Board
The concept that revenues and the costs incurred in earning those revenues should be recorded in the appropriate accounting periods
If alternative treatments of items are of equal validity, the alternative resulting in lowest profit should be used
It is assumed that only those items and events that can be measured in monetary terms are included in the financial statements. An inherent part of this assumption is that the monetary unit is stable. Thus assets purchased one year may be combined in the accounts with those purchased in other years even though the dollars used in each year actually may have different purchasing power
These are necessary characteristics that must be present in financial statements if they are to be credible
In some cases where an accounting item is deemed too small to affect a user's decisions, the "required" accounting may be ignored
All information that might affect the user's interpretation of the profitability and financial condition of a business should be disclosed
This is the governmental sector, represented in the accounting rulemaking process by the Securities and Exchange Commission
Revenue is recognized when it has been earned and realized
The principle that requires assets to be recorded at their cost at the time they are acquired and that, generally, long-term assets remain at historical costs in the asset accounts
The transparency notion is that information provided in the financial statements and the notes accompanying them should provide a clear and accurate picture of the financial affairs of the company. The key to this idea is that of disclosure
This is the concept that a business is separate from its owner or owners and the financial statements reflect the affairs of the business, not those of the owner
The assumption that a business will continue to operate indefinitely
In a few limited cases the unusual operating characteristics of an industry, usually based on risk, special accounting principles, and procedures have been developed. These may not conform completely to GAAP for other industries
A basic framework developed by the FASB to provide conceptual guidelines for financial accounting and statements. The most important features are statements of qualitative features of statements, basic assumptions underlying statements, basic accounting principles, and modifying constraints
The idea that economic activities of an entity can be divided logically and identified with specific time periods, such as the year or quarter
If accounting concepts suggest a particular accounting treatment for an item but it appears that the theoretically correct treatment would require an unreasonable amount of work, the accountant may analyze the benefits and costs of the preferred treatment to see if the benefit gained from its adoption is justified by the cost
The concept that information in financial statements cannot be selected or presented in a way to favor one set of interested parties over another
With regards to revenue, it takes place only when cash, a financial claim, or other consideration is received for the sale of goods or services
Responses:
Conceptual framework
Transparency
Industry practice constraint
Periodicity of income
Private sector
Separate economic entity assumption
Revenue recognition principle
Public sector
Monetary unit assumption
Neutrality characteristic
Qualitative characteristic
Materiality constraint
Full disclosure principle
Matching principle
Historical cost basis principle
Realization
Going concern assumption
Conservatism constraint
Cost-benefit test
Correct Answer:
Premises:
Responses:
This is the nongovernmental sector of society. In an accounting context it is the business sector, represented in the accounting rule-making process by the Financial Accounting Standards Board
The concept that revenues and the costs incurred in earning those revenues should be recorded in the appropriate accounting periods
If alternative treatments of items are of equal validity, the alternative resulting in lowest profit should be used
It is assumed that only those items and events that can be measured in monetary terms are included in the financial statements. An inherent part of this assumption is that the monetary unit is stable. Thus assets purchased one year may be combined in the accounts with those purchased in other years even though the dollars used in each year actually may have different purchasing power
These are necessary characteristics that must be present in financial statements if they are to be credible
In some cases where an accounting item is deemed too small to affect a user's decisions, the "required" accounting may be ignored
All information that might affect the user's interpretation of the profitability and financial condition of a business should be disclosed
This is the governmental sector, represented in the accounting rulemaking process by the Securities and Exchange Commission
Revenue is recognized when it has been earned and realized
The principle that requires assets to be recorded at their cost at the time they are acquired and that, generally, long-term assets remain at historical costs in the asset accounts
The transparency notion is that information provided in the financial statements and the notes accompanying them should provide a clear and accurate picture of the financial affairs of the company. The key to this idea is that of disclosure
This is the concept that a business is separate from its owner or owners and the financial statements reflect the affairs of the business, not those of the owner
The assumption that a business will continue to operate indefinitely
In a few limited cases the unusual operating characteristics of an industry, usually based on risk, special accounting principles, and procedures have been developed. These may not conform completely to GAAP for other industries
A basic framework developed by the FASB to provide conceptual guidelines for financial accounting and statements. The most important features are statements of qualitative features of statements, basic assumptions underlying statements, basic accounting principles, and modifying constraints
The idea that economic activities of an entity can be divided logically and identified with specific time periods, such as the year or quarter
If accounting concepts suggest a particular accounting treatment for an item but it appears that the theoretically correct treatment would require an unreasonable amount of work, the accountant may analyze the benefits and costs of the preferred treatment to see if the benefit gained from its adoption is justified by the cost
The concept that information in financial statements cannot be selected or presented in a way to favor one set of interested parties over another
With regards to revenue, it takes place only when cash, a financial claim, or other consideration is received for the sale of goods or services
Premises:
This is the nongovernmental sector of society. In an accounting context it is the business sector, represented in the accounting rule-making process by the Financial Accounting Standards Board
The concept that revenues and the costs incurred in earning those revenues should be recorded in the appropriate accounting periods
If alternative treatments of items are of equal validity, the alternative resulting in lowest profit should be used
It is assumed that only those items and events that can be measured in monetary terms are included in the financial statements. An inherent part of this assumption is that the monetary unit is stable. Thus assets purchased one year may be combined in the accounts with those purchased in other years even though the dollars used in each year actually may have different purchasing power
These are necessary characteristics that must be present in financial statements if they are to be credible
In some cases where an accounting item is deemed too small to affect a user's decisions, the "required" accounting may be ignored
All information that might affect the user's interpretation of the profitability and financial condition of a business should be disclosed
This is the governmental sector, represented in the accounting rulemaking process by the Securities and Exchange Commission
Revenue is recognized when it has been earned and realized
The principle that requires assets to be recorded at their cost at the time they are acquired and that, generally, long-term assets remain at historical costs in the asset accounts
The transparency notion is that information provided in the financial statements and the notes accompanying them should provide a clear and accurate picture of the financial affairs of the company. The key to this idea is that of disclosure
This is the concept that a business is separate from its owner or owners and the financial statements reflect the affairs of the business, not those of the owner
The assumption that a business will continue to operate indefinitely
In a few limited cases the unusual operating characteristics of an industry, usually based on risk, special accounting principles, and procedures have been developed. These may not conform completely to GAAP for other industries
A basic framework developed by the FASB to provide conceptual guidelines for financial accounting and statements. The most important features are statements of qualitative features of statements, basic assumptions underlying statements, basic accounting principles, and modifying constraints
The idea that economic activities of an entity can be divided logically and identified with specific time periods, such as the year or quarter
If accounting concepts suggest a particular accounting treatment for an item but it appears that the theoretically correct treatment would require an unreasonable amount of work, the accountant may analyze the benefits and costs of the preferred treatment to see if the benefit gained from its adoption is justified by the cost
The concept that information in financial statements cannot be selected or presented in a way to favor one set of interested parties over another
With regards to revenue, it takes place only when cash, a financial claim, or other consideration is received for the sale of goods or services
Responses:
Related Questions
Q85: Define and give an example of all
Q86: Why is the cost principle dependent on
Q87: Explain the following statement. "Investors and creditors
Q88: Define the two aspects of the monetary
Q89: What two tests must be met in
Q90: Indicate in each case whether the item
Q92: Why are notes important in financial statements
Q93: How are the concepts of materiality and
Q94: Match the description with the accounting terms.
Q95: Match the descriptions with the qualitative characteristics
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents