Chapter 14 Vocabulary

This refers to the norms and standards followed within a specific industry.

• Conservatism

• Industry Practice

• Matching Principle

• Monetary Unit Assumption

This principle assumes that a business will continue to operate indefinitely.

• Neutrality

• Periodicity of Income

• Historical Cost Basis

• Going Concern

This concept allows businesses to report their financial performance over specific time periods, such as months or years.

• Historical Cost Basis

• Periodicity of Income

• Revenue Recognition

• Realization

This test evaluates whether the benefits of providing information outweigh the costs of doing so.

• Materiality

• Industry Practice

• Cost-Benefit Test

• Transparency

Financial information should be free from bias.

• Neutrality in Accounting

• Full Disclosure Principle

• Going Concern

• Transparency

This principle advises that uncertain situations should be approached with caution.

• Materiality

• Conservatism

• Realization

• Historical Cost Basis

This refers to the process of recording revenue when it is earned and realizable.

• Realization

• Conservatism

• Monetary Unit Assumption

• Historical Cost Basis

This assumption states that financial transactions should be recorded in a stable currency.

• Periodicity of Income Assumption

• Historical Cost Basis

• Revenue Recognition Principle

• Monetary Unit Assumption

This principle requires assets to be recorded at their original purchase price.

• Revenue Recognition Principle

• Conservatism

• Historical Cost Basis

• Going Concern

This principle requires that all information relevant to financial statements be disclosed.

• Matching Principle

• Transparency

• Materiality

• Full Disclosure Principle