General Accounting Principle: This contain the accounting principle generally used in every corporation. This is based on the economic condition of country and differ from one country to another. Cost Concept: As per this concept actual value of the assets are recorded in the books of accounts. The accountant of the company should always understand the importance of this concept as when payment of asset to the seller occur then only record the transaction. Business Entity Assumption: The business entity concept means that the business man should record the business transaction and personal transaction separately. Each form of business organization is a separate business entity. So, the accountant will record the personal and business transaction separately. Revenue Recognition Principle: Revenue recognition principle provide the rules and regulation that should be follow while recognizing the revenue. In accrual basis of accounting the accountant record the transaction of sales when it occur not when the payment against sale is received. Expense Recognition Principle: As per this accounting principle the expense occur to initiate sales must be recorded in the same accounting period. If the expenses occur not directly relates to the sales period than it should be expense incurred. Going Concern Assumption: As per this concept the life of the company is not defined. As company is artificial person and the death of company is not possible. If auditor of the company says that the future of company is dark then only the question on existence of company arises. To identify: The accounting principle or assumption best as per the situation.

Question

Want to see the full answer?

Answer 1

Question

Chapter 1, Problem 6QS

To determine

General Accounting Principle:

This contain the accounting principle generally used in every corporation. This is based on the economic condition of country and differ from one country to another.

Cost Concept: As per this concept actual value of the assets are recorded in the books of accounts. The accountant of the company should always understand the importance of this concept as when payment of asset to the seller occur then only record the transaction.

Business Entity Assumption: The business entity concept means that the business man should record the business transaction and personal transaction separately. Each form of business organization is a separate business entity. So, the accountant will record the personal and business transaction separately.

Revenue Recognition Principle: Revenue recognition principle provide the rules and regulation that should be follow while recognizing the revenue. In accrual basis of accounting the accountant record the transaction of sales when it occur not when the payment against sale is received.

Expense Recognition Principle: As per this accounting principle the expense occur to initiate sales must be recorded in the same accounting period. If the expenses occur not directly relates to the sales period than it should be expense incurred.

Going Concern Assumption: As per this concept the life of the company is not defined. As company is artificial person and the death of company is not possible. If auditor of the company says that the future of company is dark then only the question on existence of company arises.

To identify: The accounting principle or assumption best as per the situation.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

A dress company has the following standards

What amount must be the actual quantity of material cost ?

Given the following tax structure, what minimum tax would need to be assessed on Shameika to make the tax progressive with respect to average tax rates? Taxpayer Salary Muni-Bond Interest Total Tax Mihwah $ 20,500 $ 6,150 $ 1,558 Shameika $ 81,500 $ 19,250 ???