5141276
| 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. |
Want to create your own Flashcards for free with GoConqr? Learn more.