End of Period Adjustments

Question 1

3 benefits of account concepts

Answer 1

1) they ensure that everyone treats particulars situations in the same way.

2) they provide guidelines for the treatment of new or unfamiliar accounting problems

3) they enable anyone using accounting statements to be confident that the information provided would have been very similar, whoever had prepared them.

Question 2

Accrual

Answer 2

an amount owed by a business for an expense

Question 3

what are 3 important concepts which affect the way in which income statement are prepared

Answer 3

accrual concept
prudence concept
consistency concept

Question 4

Accrual concept

Answer 4

in order to calculate profit, income for a financial period is matched exactly with expenses that relate to that accounting period, whether paid or not.

Question 5

another name for accrual concept is

Answer 5

matching concept

Question 6

Prudence concept

Answer 6

where there is doubt, asset and profit values should be under- rather than overstated

Question 7

Consistency concept

Answer 7

the rule that accounting polices should be carried out in the same way year on year

Question 8

why are expenses adjusted