ACCOUNTING PRINCIPLES 15TH EDITION COMPREHENSIVE SCRIPT WITH SOLUTIONS

ACCOUNTING PRINCIPLES 15TH EDITION
COMPREHENSIVE SCRIPT WITH SOLUTIONS

◉ Full disclosure principle.
Answer: Prescribes that a company report the details behind
financial statements that would impact users' decisions. (Typically
found in the footnotes to the statements.)


◉ Generally Accepted Accounting Principles (GAAP).
Answer: Rules, practices, and procedures that define the proper
execution of accounting


◉ Going-concern assumption.
Answer: Assumption that a business will continue to operate well
into the future


◉ Historical cost.
Answer: Assets are recorded at cost


◉ IFRS reporting standards.
Answer: Specific accounting rules developed by the International
Accounting Standards Board

, ◉ Main Accounting Principles of GAAP.
Answer: 1. Measurement (Cost) 2. Revenue Recognition 3. Expense
Recognition (Matching) 4. Full Disclosure


◉ Main Assumptions of GAAP.
Answer: 1. Going Concern 2. Monetary Unit 3. Time Period 4.
Economic Entity


◉ Main Constraints of GAAP.
Answer: 1. Materiality 2. Cost-Benefit Relationship 3. Consistency 4.
Conservatism


◉ Matching principle.
Answer: Recognize expenses in the same period as the revenue they
help generate


◉ Materiality constraint.
Answer: Only events that are significant and that justify the
usefulness of the information are recorded


◉ Measurement Principle (Cost Principle).