Unit 2 - accounting concepts

Description

AS - Level Accounting Flashcards on Unit 2 - accounting concepts, created by naomi123_ on 14/04/2016.
naomi123_
Flashcards by naomi123_, updated more than 1 year ago
naomi123_
Created by naomi123_ over 8 years ago
3
0

Resource summary

Question Answer
what is the going concern concept? when accounts are prepared it is assumed that the business is going to continue to operate for the foreseeable future and assets are recored at cost
what is the accrules concept? says that income statements should be based on income and expenditure not receipts and payments.
what is the prudence concept? means that accountants always consider the worst scenario and understate rather than overstate profits and assets values.
example of a prudence concept revceibavles might not pay the full amount back hence they need to make provision for doubtful debts
what is the consistency concept? means that once an accounting policy has been decided the firm should continue to use the same policy in subsequent years when preparing the financial statement unless there is a good reason for changing
example of the consistency concept consistency concepts says keep the rate of 25% but the prudence concept say change to 50% so he should change it to 50%
what is the realisation concept? sales are recored when the customer physically removes the goods and the business raises a sales invoice and purchases when a supplier deliver goods regardless of when any payment is made or when the customer promisies to buy the goods
what is the (business) entity concept? for accounting purposes the owner =s of the business are regarded a completely separate from the business
what is the materiality concept? this concept is relevant when making the distinction between capital or revenue items only use it if it makes materiality significance difference
what it the dual aspect concept? the double entry system fro every dr there must be a bathing cr and vice versa
what is the objectivity concept? accountants should not show personal bias and transactions should be based on evidence such as source documents
what is the cost concepts? a company records assets on the balance sheet as historical cost which is how much the business originally paid for an asset
where do revenue items go? revenue items go onto the income statment
where does capital items go? they go onto the balance sheet
what does NVR mean? it means net reliable value how much the goods could be sold for less any costs in making it into sealable condition.
what is cost? how much the business originally paid for the goods.
Show full summary Hide full summary

Similar

CPA Exam Topics and breakdown
joemontin
CPA Exam Flashcards
joemontin
CPA Exam Sample Questions Pt. 1
nedtuohy
Accounting Definitions
Tess Morris
Accounting I - Objective 2 Keller
Kathleen Keller
Exam Bank 2
Valek
Specific Order Costing
Natalie Gray
COSTING SYSTMES
Francia o
Glossary of Accounting Terms
racheloucks
Unit 4 The Accounting Cycle
a.j.hemphill
Chapter One: Introduction to Accounting
charlotte.power9