MGAB03H3 Lecture : Excellent, well written accounting notes for chapters 1,2 and discussion notes

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fuchsiasheep601

11 Feb 2012

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Chapter 2 framework, presentation and usage y foundations of gaaps (principle based) Separate entity transactions of business separate from personal transactions of. Stable dollar/unit-of-measure only items that can be measured into a monetary unit. Time period life of company can be reported over a series of short time periods. Going concern/continuity entity is expected to continue its operations. Justifies use of owners cost principles can be included. Purchasing power of the unit of measure does not change over time. necessary to prepare annual financial statements. evidence rather than subjective judgement. Exchanging object for service is more judgemental. (ex. Exchange a computer costing 500 for 000 worth of labour, recording is based on cost of computer) Historical cost assets and liabilities are recorded on a basis of what you piad objectivity amount used in recording transactions are to be based on objective. Revenue recognition revenue be assigned to the accounting period which is earned.

Related Questions

TRUE OR FALSE:

___ The most common point of revenue recognition is when thegoods or services are transferred or provided to the seller. (Ondelivery).

___ A change in the inventory accounting method would violatethe principle of consistency.

___ When transactions occur, we must decide when to recognizethe transactions in the financial statements and how to measurethem. The principles of recognition and measurement are:Objectivity, Recognition of Income, Principle of Congruence(Matching) and Consistency.

___ Inflation changes the purchasing power of monetary units, ifinflation is material, the stable dollar hypothesis is valid.

___ The purpose of accounting theory is to provide a coherentand general framework for assessing accounting practices so thatthey can guide the development of new practices and procedures.

___ A cash deposit at a bank or similar financial institution isa financial liability because it represents, for the depositor, acontractual right to obtain cash from the entity, to write a checkagainst the balance of the same in favor of a creditor in paymentof an asset financial.

amberhedgehog49

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

34 ABC Ltd. Commenced operations on September 21, 200A. After less than four months of operations it has decided that its first fiscal year-end will be December 31, 200A. This is contravention of which generally accepted accounting principle? a. Periodicity or time period principle b. Continuity or going-concern principle C. Historical cost principle d. Unit-of-measure principle e. None of the above The correct answer is 'e'.

MGAB03H3 Lecture : Excellent, well written accounting notes for chapters 1,2 and discussion notes

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