FAR 1 THEORIES

• Cost Principle - Assets are recorded at their original costs or other amounts that can be determined with reasonable accuracy.
• Revenue Recognition Principle - Revenue is recognized when it is realized, earned, and measurable
• Matching Principle - Expenses are matched to the revenue they helped generate during an accounting period
• Full Disclosure Concept - All information necessary for users to make informed decisions about financial statements must be disclosed
• Objectivity Principle - Accountants must avoid personal biases and opinions when preparing financial statements
• Going Concern Assumption - Financial statements assume that the business will continue operating into the future
• Conservatism Principle - When there are two possible estimates of an item's value, accountants choose the more conservative estimate (lower amount)
• Going-Concern Assumption - A company will continue operating into the foreseeable future unless there's evidence to suggest otherwise
• Monetary Unit Assumption - Transactions are measured using monetary units (dollars)
• Time Period Assumption - Financial statements cover specific periods of time
• Consistency Principle - Consistent methods of recording transactions from one year to another
• Monetary Unit Assumption - Only monetary items can be recorded in financial statements
• Historical Cost Principle - Assets are reported at their original cost unless impairment has occurred
• Accrual Basis of Accounting - Transactions are recorded as they occur rather than when cash changes hands
• List of all accounts with their respective debit or credit balances

  Trial balance
• Control device that helps minimize accounting errors

  Trial balance
• which accounting concepts means that similar items should receive a siilar accounting treatment?

  Consistency
• Which of the accounting concept states that omitting or misstating this information could influence users of financial statements?

  The materiality concept
• Transactions are recorded based on reliable and verifiable information. This is in accordance with the _____ concept


  Objectivity
• The measurement phase of accounting is accomplished by?

  a.storing data

  b.reporting to the decision makers

  c.recording data

  d.processing data

  c.recording data