Accounting Concepts and Principles

These are guidelines that accountants follow when recording and communicating accounting information

• Accounting concepts and principles

• Accounting laws and regulations

• Accounting memos and guidelines

• Accounting walkthrough, guides and cheats

Treating a business and its owner as one and the same violates which of the following principles?

• Verifiability

• Separate Entity

• Materiality

• Going concern

This concept requires the preparation of financial statements at least annually.

• Reporting period

• Accrual basis

• Materiality

• Separate entity

Which branch of accounting is governed by the Philippine Financial Reporting Standards?

• Management accounting

• Cost accounting

• Financial accounting

• Tax accounting

What concept justifies the use of the accrual basis and historical cost concepts?

• Going concern

• Materiality

• Monetary unit

• Full disclosure

The assumption that a business entity will not cease its operations in the near future refers to the concept of Consistency

• True

• False

Using the same accounting treatment for identical items from one period to another is an application of the concept of Time Period.

• True

• False

Information has the qualitative characteristic of relevance if it is capable of making a difference in users' decisions.

• True

• False

Under the accrual basis of accounting, a business records a sale

• When the sale occurs.

• When the sale price is collected.

• At the point in time when (a) and (b) above are satisfied

• a or b, as an accounting policy choice

When making judgments and estimates under conditions of uncertainty, the accountant chooses the potentially unfavorable outcome over the favorable one. This concept refers to

• Separate entity

• Going concern

• Prudence/Conservatism

• Reporting Period