Class1: Accounting Concepts

Question 1

List 7 accounting concepts

Answer 1

Going-Concern
Entity
Dual aspect principle
Cost
Money Measurement
Prudence
Realization
Consistency
Periodicity
Accrual accounting

Question 2

What is going concern?

Answer 2

This concepts initiate that companies and businesses begin with the intention for its continuity with exceptions

Question 3

What is an entity

Answer 3

It is a clearly defined economic unit separate from other subdivisions of accounting

Question 4

What is Cost?

Answer 4

This is the monetary value for expenditure e.g. service, labor, raw materials, assets etc.

Question 5

What is Money Measurement?

Answer 5

This concept states that accounting transactions can only be recorded if they can be expressed in monetary terms

Question 6

What is Prudence?

Answer 6

This is a concept that ensures the company’s value is not overvalued and its income and assets overstated

Question 7

What is Realization?

Answer 7

Realization is the point in time when revenue is generated

Question 8

What is Consistency?

Answer 8

This is a concept that ensures that a company’s accounting statements follow the same accounting principles, methods, practices and procedures from one accounting period to the next

Question 9

What is Periodicity?

Answer 9

This concept requires accounting statement to be divided into accounting periods

Question 10

What is Accrual Accounting?

Answer 10

When transactions are recorded in the books of accounts as they occur even if the payment for that particular product or service has not been received or made,