Fundamental Concepts of Accounting

Accounts for the business must be kept separate from those of the owners. What is this concept called?

• Money Management

• Entity

• Cost

• Reality

Financial statements only show a limited picture of a business. This is expressed in monetary terms. This is called

• Equity

• Entity

• Money Management

• Cost

What is the concept that allows a business to enter assets at he price they paid for it in the accounting records?

(a)  

What is the concept that assumes an entity will continue to operate indefinitely even if they are experiencing loss?

• Objectivity principle

• Going Concern

• Conservatism

• Dual aspect

All accounting transactions must keep keep the accounting equation balanced. If something happens on one side it has to also happen on the other side. What is this called?

(a)  

If a company reports a profit of $100,000 that includes an amount of $20,000 for an order they just received. What is their real profit?

(a)  

Accounting records will be initiated from invoices, receipts or bank statements and not personal opinion. this is called the ___________ concept

• money management

• Conservatism

• Dual Aspect

• Objectivity

To avoid overstatements , this concept requires revenues and related expenses be recorded in the same accounting period.

• Dual aspect

• Consistency

• Matching

• Entity

Once an entity decides on one method of reporting it must use the same method the next year. This is called the (a)   concept

Only recording records events that justify usefulness . This means do not record every single item if bought in a pack or bulk. This is called the _______ concept

• Matching

• Materiality

• Realization

• Revelation