Accounting Concepts

Question 1

Money Measurement

Answer 1

Only transactions capable of being measured monetarily are recognised

Question 2

Duality

Answer 2

All transactions have two effects. Debit and credit.

Question 3

Cost

Answer 3

Asset and liabilities recorded at historical cost rather than estimating current worth. exception is revaluation.

Question 4

Going Concern

Answer 4

Business to which the statements relate will continue to operate for foreseeable future. (Depreciation)

Question 5

Accruals

Answer 5

Costs and revenue are matched to the time period in which they arose.

Question 6

Consistency

Answer 6

Use same accounting treatment for similar transactions.

Question 7

Prudence

Answer 7

Do not overstate incomes/assets or understate expenses/liabilities.

Question 8

Materiality

Answer 8

Some items not worth recording separately due to low value not affecting decisions made by users of statements.

Question 9

Realisation

Answer 9

Revenue and purchases are recorded at date when goods/services are provided, not when paid for.

Question 10

Business Entity

Answer 10

Financial statements must only include transactions relating to a specific business and not the owners of it.