Question

Identify the accounting concept that describes each situation below. Do not use any concept more than once. (a) Is the rationale for why plant assets are not reported at liquidation value. (Do not use the historical cost principle.) (b) Indicates that personal and business recordkeeping should be separately maintained. (c) Ensures that all relevant financial information is reported. (d) Assumes that the dollar is the ""measuring stick"" used to report on financial performance. (e) Requires that accounting standards be followed for all items of significant size. (f) Separates financial information into time periods for reporting purposes. (g) Requires recognition of expenses in the same period as related revenues. (h) Indicates that fair value changes subsequent to purchase are not recorded in the accounts.

Answer 1

Answer: Accounting concept refers to the assumptions on which the recording of transactions is done.

Explanation: The following options could be characterized as follows :-

A. Going concern assumption

B. Economic entity assumption

C. Full disclosure principle

D. Monetary unit assumption

E. Materiality

F. Periodicity assumption

G. Expense recognition principle

H. Historical cost principle