Accounting Exam

Question 1

What is the accounting entity assumption?

Answer 1

The assumption that the records of assets, liabilities and business activities of the entity are kept completely separate from those of the owner of the entity as well as those of other entities.

Question 2

Why is it like this for small businesses as well?

Answer 2

Because if we are to access to performance of the business, we must include only information relevant to the business.

Question 3

What is verifiability mean?

Answer 3

It ensures that different, knowledgeable and independent observers can reach the same conclusion that a particular representation of an event is faithful.

Question 4

Are source documents and verifiability linked?

Answer 4

Yes, a source document can verify the claims of the business