1.3 Bases of Accounting

1. What are the three bases of accounting? (3)

What is the fundamental principle of the accrual basis of accounting? (1)

Give the three examples of accruals basis of accounting (3)

What is the advantage of the accruals basis over the cash basis of accounting? (2)

Describe the 'going concern' assumption of the accruals basis (1)

Give two examples of the importance of the going concern basis (2)

What restrictions are there on the use of the cash basis of accounting? (1)

Where IS the cash basis of accounting used? (1)

What is the principle of the cash basis of accounting? (1)

Give three examples of transactions under the cash basis of accounting (3)

When would the break up basis of accounting be used? (1)

What are the two effects of using the break up basis on the SOFP? (2)