Accounting SAC 1
What are the accounting assumptions? - answer1. Accounting entity assumption
2. Going concern assumption
3. Period assumption
4. Accrual basis assumption
What is the accounting entity assumption? - answer The businesses assets and
liabilities are kept separate from the owner's entity.
What is going concern assumption? - answer The existing entity will continue to operate
in the future and its records are kept on that basis.
What is period assumption? - answer Reports are prepared for a particular period of
time in order to obtain comparability of results. The business how to produce at least 1
report per year.
What is accrual basis assumption? - answer Revenue are recognized when earned and
expenses are recongesided when incurred, so profit is calculated as reveune earned in
a particular period , less expense incurred in the period.
What are the qualitative characteristics? - answer1. Relevance
2. Faithful representation
3. Verifiability
4. Comparability
5. Timelessness
6. Understandability
What is relevance? - answerFinancial information must be capable of making a
difference to the decisions made by users by helping them to form predictions and/or
confirm or change their previous evaluations.
What is faithful representation? - answerFinancial information must be faithful
representation of the real-world economic event if claims to represent and be complete,
free from material error and neutral.
What is verifiability? - answerFinancial information should allow different knowledgeable
and independent observers to reach a consensus that an event is faithfully represented.
What is comparability? - answerFinancial information should enable users to identify
and understand similarities in and differences among items, when compared with similar
information about other entities.
What are the accounting assumptions? - answer1. Accounting entity assumption
2. Going concern assumption
3. Period assumption
4. Accrual basis assumption
What is the accounting entity assumption? - answer The businesses assets and
liabilities are kept separate from the owner's entity.
What is going concern assumption? - answer The existing entity will continue to operate
in the future and its records are kept on that basis.
What is period assumption? - answer Reports are prepared for a particular period of
time in order to obtain comparability of results. The business how to produce at least 1
report per year.
What is accrual basis assumption? - answer Revenue are recognized when earned and
expenses are recongesided when incurred, so profit is calculated as reveune earned in
a particular period , less expense incurred in the period.
What are the qualitative characteristics? - answer1. Relevance
2. Faithful representation
3. Verifiability
4. Comparability
5. Timelessness
6. Understandability
What is relevance? - answerFinancial information must be capable of making a
difference to the decisions made by users by helping them to form predictions and/or
confirm or change their previous evaluations.
What is faithful representation? - answerFinancial information must be faithful
representation of the real-world economic event if claims to represent and be complete,
free from material error and neutral.
What is verifiability? - answerFinancial information should allow different knowledgeable
and independent observers to reach a consensus that an event is faithfully represented.
What is comparability? - answerFinancial information should enable users to identify
and understand similarities in and differences among items, when compared with similar
information about other entities.
