ACCT 211 Lecture Notes - Lecture 1: Financial Accounting Standards Board, International Accounting Standards Board, Statement Of Changes In Equity

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champagnewolf317

29 Sep 2016

School

Binghamton University

Department

Accounting

Course

ACCT 211

Professor

Elliot Kamlet

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Document Summary

Economic entity assumption states that the financial activities of a business can be separated from the financial activities of the business" owners (business is a separate entity than its owners). Time period assumption accountants assume that economic information can be meaningfully captured and communicated over short periods of time. Monetary unit assumption accountants assume that the dollar is the most effective means to communicate economic activity. Going concern assumption states that a company will operate indefinitely into the foreseeable future. Revenue an increase in resources resulting from the sale of goods or services. The revenue recognition principle states that a revenue should be recorded when a resource has been earned (not when cash is received) Expenses a decrease in resources resulting from the sale of goods or provision of services. The matching principle states that expenses should be recorded in the period resources are used to generate revenue.

Related Questions

Listed below are several information, characteristics, andaccounting principles and assumptions. Match the term with theappropriate phrase that states its application.
(Points : 30)

Potential Matches:

1 : Application of the same accounting principles as in thepreceding year

2 : Earning process completed and realized or realizable

3 : Notes as part of necessary information to a fairpresentation

4 : Valuing assets at amounts originally paid for them

5 : Yearly financial reports

6 : Stable dollar assumption

7 : Affairs of the business distinguished from those of itsowners

8 : Presentation of error-free information withrepresentational faithfulness

9 : Business enterprise assumed to have a long life

10 : Accruals and deferrals in adjusting and closingprocess

Answer

: Monetary unit assumption

: Revenue recognition principle

: Reliability characteristic

: Periodicity assumption

: Matching principle

: Full disclosure principle

: Economic entity assumption

: Going concern assumption

: Historical cost principle

: Consistency characteristic

byzantiumsnake275

Listed below are several terms and phrases associated with basic assumptions, broad accounting principles, and constraints. Pair each item from List A with the item from List B that is most appropriately associated with it.

List A =

1. Expense recognition

2. Periodictiy

3. Historical cost principle

4. Materiality

5. Revenue recognition

6. Going concern assumption

7. Monetary unit assumption

8. Economic entity assumption

9. Full-disclosure principle

List B =

1. A common denominator is the dollar

2. All information that could affect decisions should be reported

3. Concerns the relative size of an item and its effect on decisions

4. Criteria usually satisfied for products at point of sale

5. Record expenses in the preiod the related revenue is recognized

6. The enterprise is separate from its owners and other entities.

7. The entity will continue indefinitely

8. The life of an enterprise can be divided into artificial time periods.

9. Thje original transaction value upon acquistion.

blackreindeer745

1. Economic entity assumption 6. Matching principle
2. Going concern assumption 7. Full disclosure principle
3. Monetary unit assumption 8. Revenue recognition principle
4. Time period assumption 9. Materiality
5. Cost principle 10. Conservatism

(a) Is the rationale for why plant assets are not reported atliquidation value. (Do not use
historical cost principle.)
(b) Indicates that personal and business record-keeping should beseparately maintained.
(c) Ensures that all relevant financial information isreported.
(d) Assumes that the dollar is the âmeasuring stickâ used to reporton financial performance.
(e) Requires that the operational guidelines be followed for allsignificant items.
(f ) Separates financial information into time periods forreporting purpose.
(g) Requires recognition of expenses in the same period as relatedrevenues.
(h) Indicates that market value changes subsequent to purchase arenot recorded in the accounts.

brownhound203

ACCT 211 Lecture Notes - Lecture 1: Financial Accounting Standards Board, International Accounting Standards Board, Statement Of Changes In Equity

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