General accounting principle:
This contains the accounting principal generally used in every corporation. This is based on the economic condition of country and differs from one country to another.
Cost concept:
As per this concept, actual value of the assets is recorded in the
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 provides the rules and regulation that should be followed while recognizing the revenue. In accrual basis of accounting the accountant record the transaction of sales when it occurs not when the payment against sale is received.
Specific accounting principle:
The specific principle is specific in nature. Means they differ from one company to another. They are based on the type of business, nature of business, scale of business and many more factors.
Matching (expense recognition) principle:
As per this accounting principle the expense occurs 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 the company is artificial person and the death of the company is not possible. If auditor of the company says that the future of the company is dark, then only the question on existence of company arises.
Full disclosure principle:
The company should provide all the relevant information in the financial statement. As financial users need the accounting information, the company should disclose all the important information as per full disclosure principle.
To identify: The accounting principle or assumption best as per the situation.
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Chapter 1 Solutions
Financial and Managerial Accounting
- Can you provide a detailed solution to this financial accounting problem using proper principles?arrow_forwardPlease provide the answer to this general accounting question with proper steps.arrow_forwardCan you provide a detailed solution to this financial accounting problem using proper principles?arrow_forward
- At the beginning of the year, Ashton Industries has assets of $275,000 and equity of $185,000. During the year, assets increase by $95,000 and liabilities increase by $65,000. What is the equity at the end of the year?arrow_forwardOakridge Hardware has assets equal to $475,000 and liabilities equal to $290,000 at year-end. What is the total equity for Oakridge Hardware at year-end?arrow_forwardPlease provide the solution to this financial accounting question with accurate financial calculations.arrow_forward
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