chapter 2

3 Pages

Financial Accounting
Course Code
Liang Chen

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Accounting Notes Chapter 2Framework presentation and usage y Foundations of GAAPS principle based 1 Separate entitytransactions of business separate from personal transactions of owners 2 Going concerncontinuityentity is expected to continue its operationsJustifies use of cost principles 3 Stable dollarunitofmeasureonly items that can be measured into a monetary unit can be includedPurchasing power of the unit of measure does not change over time4 Time periodlife of company can be reported over a series of short time periods necessary to prepare annual financial statements 5 Historical costassets and liabilities are recorded on a basis of what you piad 6 objectivityamount used in recording transactions are to be based on objective evidence rather than subjective judgementCash most objective amountExchanging object for service is more judgementalex Exchange a computer costing 2 500 for 3 000 worth of labour recording is based on co
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