Accounting Concept & Principles

The accounting guideline that requires financial statement information to be supported by independent, unbiased evidence other than

someone's belief or opinion is the:

• Business Entity Principle

• Monetary Unit Principle

• Going Concern Principle

• Objectivity Principle

The principle that requires every business to be accounted for separately and distinctly from its owner or owners is known as the

• Business Entity Principle

• Monetary Unit Principle

• Going Concern Principle

• Objectivity Principle

The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the:

• Business Entity Principle

• Monetary Unit Principle

• Going Concern Principle

• Objectivity Principle

To include the personal assets and transactions of a business's owner in the records and reports of the business would be in conflict with the:

• Business Entity Principle

• Monetary Unit Principle

• Cost Principle

• Accrual Principle

Financial statements are to be divided into specific time intervals.

• Cost Principle

• Going Concern Principle

• Objectivity Principle

• Time Period Principle

Financial statements are to be divided into specific time intervals.

• Cost Principle

• Going Concern Principle

• Objectivity Principle

• Time Period Principle

Inventory is recorded at the lower of cost or net realizable value rather than the expected selling price. This ensures profit on the sale of inventory is only realized when the actual sale takes place.

• Going Concern

• Prudence Concept

• Materiality Concept

• History Cost

Financial statements contain all information necessary to understand a business's financial condition.

• Disclosure Principle

• Time Period

• Going Concern

• Objectivity

The revenue from business activities and the expenses associated with earning that revenue are recorded in the same accounting period.

• Matching Principle

• Time Period

• Cost Principle

• Disclosure Principle

An accounting standard can be ignored if the net impact of doing so has such a small impact on the financial statements that a reader of the financial statements would not be misled.

• Materiality

• Objectivity

• Full Disclosure

• Conservatism