Accounting Concepts and Principles

Question 1

Are a set of logical ideas and procedures that will guide the accountant in recording and communicating economic information

Answer 1

Accounting concepts and principles (assumptions and postulates)

Question 2

It provides _, by which accounting practice can be evaluated and they serve as a guide in the development of new practices and procedure

Answer 2

general frame of reference

Question 3

It also provides _, that information communicated to users are prepared in a proper way

Answer 3

reasonable assurance

Question 4

The business is viewed as a separate person, distinct from its owners. Transaction of the business is only recorded in the books

Answer 4

Separate entity concept

Question 5

Under this concept, assets are initially recorded at their acquisition cost

Answer 5

Historical cost concept (cost principle)

Question 6

Under this concept, the business is assumed to continue to exist for an indefinite period of time

Answer 6

Going concern assumption

Question 7

Opposite of going concern assumptions

Answer 7

Liquidating concern

Question 8

Under this concept, some costs are initially recognized as assets and charged as expenses only when the related revenue is recognized

Answer 8

Matching (Association of cause and effect)

Question 9

Economic events are recorded in the period in which they occur rather than at the point in time

Answer 9

Accrual basis of Accounting

Question 10

It is recorded in a period when it is earned rather than when it is collected

Answer 10

Income

Question 11

It is recognized in a period when it is incurred rather than it is paid.

Answer 11

Expense

Question 12

Under this concept, the accountants observe some degree of caution when exercising judgments needed in making accounting estimates under condition or uncertainty

Answer 12

Prudence or Conservatism

Question 13

Under this concept, the life of the business is divided into series of reporting periods

Answer 13

Time period (Periodicity or Accounting period concept)

Question 14

An accounting period that is shorter than 12 months

Answer 14

interim period

Question 15

Under this concept, assets, liabilities, equity, income, and expenses are stated in terms of a common unit of measure, which is the Peso, in the Philippine

Answer 15

Stable monetary unit

Question 16

An item is considered material if its omission or misstatement could influence economic decisions. Also, based on the size and nature of an item being judged

Answer 16

Materiality concept

Question 17

Under this concept, the cost of processing and communicating information should not exceed the benefits to be derived from it.

Answer 17

Cost-benefit (Cost constraint)

Question 18

Information communicated to users reflect a series of judgemental trade-offs

Answer 18

Full disclosure principle

Question 19

Under this period, the business shall apply accounting policies consistently and present information consistently. from one period to another

Answer 19

Consistency concept

Question 20

are those specifically mentioned in the conceptual framework for financial reporting in the PFRS

Answer 20

Explicit concepts and principle