Depreciation or amortization of these assets is charged.Plant assets should be recorded at their purchase price.Question 11: What is the Application of Going Concern Assumption?Īnswer: The application of the going concern assumption is as follows: Question 10: What is Going Concern Assumption?Īnswer: This is also known as the ‘Continuity assumption.’ The central tenet of this assumption is that a business will continue to exist indefinitely, or at least long enough to carry out its existing plans and contracts. To the extent of his or her capital, the owner is treated as a creditor.
In other words, an entity’s transactions must be kept separate from those of its owner and all other economic entities. Question 09: What is Economic Entity Assumption?Īnswer: The business is treated as a separate unit or entity from its owner under this assumption (s). Question 08: What is Monetary Unit Assumption?Īnswer: According to this assumption, only transaction data that can be expressed in terms of money (in our country, USD) should be included in accounting records. However, the gain is generated by the sale of fixed or non-current assets. Income is generated from the sale of goods or services. Question 07: What is The Difference between Income and Gain?Īnswer: Income is defined as the excess of revenues earned over expenses incurred in the normal course of business.
Question 06: What are the Basic Elements of Financial Statements?Īnswer: The basic elements of financial statements are as follows: Question 05: What are the Secondary Characteristics of Accounting Information?Īnswer: The following are the secondary characteristics of accounting information:Ĭomparability: Comparability states that information becomes more useful if it allows for intra- and inter-comparison.Ĭonsistency: Consistency states that the accounting terms, methods, or principles mentioned in the financial statements must be applied consistently from one period to the next.
The information must be verifiable, faithful in representation, and neutral to be considered reliable.
#Basic accounting principles crossword answers free
Reliability: Information can be trusted if it is free of errors and bias. To be relevant, information should have the following characteristics: predictive value, feedback value, and timeliness. Relevance: Information becomes relevant when it has the potential to influence a decision. Question 04: What are the Primary Characteristics of Accounting Information?Īnswer: The following are the primary characteristics of accounting information: Question 03: What are the Qualitative Characteristics of Accounting Information?Īnswer: Qualitative characteristics of accounting information are those that aid in distinguishing between more useful information and less useful information. Question 02: What are the Objectives of Financial Reporting?Īnswer: The objectives of financial reporting are to provide information that will help current and potential investors, creditors, and other users make sound investments, credit, and other decisions. Question 01: What is Conceptual Framework?Īnswer: A conceptual framework is an intelligent or consistent system of interconnected objectives and fundamentals that can lead to consistent standards, and it prescribes the nature, function, and limits of financial accounting and financial statements. The 30 important accounting principles questions and answers are as follows: So let’s get started… Accounting Principles Questions and Answers It will help you understand the important Accounting Principles terms and their explanations quickly.īy reading this post, you may quickly prepare for accounting courses and for any competitive tests such as school and college exams, vivas, job interviews, and so on. In this article, we’ll learn the 30 most important accounting principles questions and their answers. The 10 thchapter of our accounting learning course is “Accounting Principles”.
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