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1. The set of guidelines and procedures that constitute acceptable accounting practice at a given time is GAAP, which stands for generally accepted accounting principle.

1. The set of guidelines and procedures that constitute acceptable accounting practice at a given time is GAAP, which stands for generally accepted accounting principle.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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1. The set of guidelines and procedures that constitute acceptable accounting practice at a given time is GAAP, which stands for generally accepted accounting principle. 2. Accounting records and statements are based on the most reliable data available so that they will be as accurate and as useful as possible. This is called objectivity principle. 3. The principle of historical cost states that acquired assets should be recorded at their actual cost and not at what management thinks they are worth as at reporting date. 4. An accounting entity is an organization or section of an organization that stands apart from other organizations and individuals as a separate economic unit. This is called entity concept. 5. Periodicity is the concept behind providing financial accounting information about the economic activities of an enterprise for specified time periods. 6. An entity can begin its operation in a calendar year or fiscal year. 7. Going concern principle assumes that an entity will continue to operate indefinitely. 8. Revenue should be recorded in the period it is earned, regardless of the time the cash is received. Expense should be recorded at the time it is incurred, regardless of the time that cash is paid. 9. The cost should match with the revenue generated. It only means that with every income earned there is an expense given. This is called matching principle. 10. The reasonable monetary unit in the Philippines is the Philippine peso. Businesses should use single monetary unit to ignore the effects of inflation in the accounting records.
Transcribed Image Text:1. The set of guidelines and procedures that constitute acceptable accounting practice at a given time is GAAP, which stands for generally accepted accounting principle. 2. Accounting records and statements are based on the most reliable data available so that they will be as accurate and as useful as possible. This is called objectivity principle. 3. The principle of historical cost states that acquired assets should be recorded at their actual cost and not at what management thinks they are worth as at reporting date. 4. An accounting entity is an organization or section of an organization that stands apart from other organizations and individuals as a separate economic unit. This is called entity concept. 5. Periodicity is the concept behind providing financial accounting information about the economic activities of an enterprise for specified time periods. 6. An entity can begin its operation in a calendar year or fiscal year. 7. Going concern principle assumes that an entity will continue to operate indefinitely. 8. Revenue should be recorded in the period it is earned, regardless of the time the cash is received. Expense should be recorded at the time it is incurred, regardless of the time that cash is paid. 9. The cost should match with the revenue generated. It only means that with every income earned there is an expense given. This is called matching principle. 10. The reasonable monetary unit in the Philippines is the Philippine peso. Businesses should use single monetary unit to ignore the effects of inflation in the accounting records.
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