Question

Match each of the numbered descriptions with the principle or assumption it best reflects. Enter the letter for the appropriate principle or assumption in the blank space next to each description.
A. Cost principle
B. Matching principle
C. Specific accounting principle
D. Full disclosure principle
E. General accounting principle
F. Business entity assumption
G. Revenue recognition principle
H. Going-concern assumption
1. Revenue is recorded only when the earnings process is complete.
2. Information is based on actual costs incurred in transactions.
3. Usually created by a pronouncement from an authoritative body.
4. Financial statements reflect the assumption that the business continues operating.
5. A company reports details behind financial statements that would impact users’ decisions.
6. A company records the expenses incurred to generate the revenues reported.
7. Derived from long-used and generally accepted accounting practices.
8. Every business is accounted for separately from its owner or owners.

Answer 1

Answer:

1 with G = Revenue Recognition Principle

2 with A = Cost principle

3 with C = Specific Accounting Principle

4 with H = Going concern assumption

5 with D = Full Disclosure Principle

6 with B = Matching Principle

7 with E = General Accounting Principle

8 with F = Business Entity Assumption

Explanation:

Revenue shall be recognised as at the time that their is 100% certain that the risk and reward associated is transferred to the customer. = Revenue Recognition Principle.

Cost Principle assumes to record transactions at its cost and not the market value.

Specific Accounting Principle is made with specific orders for specific industry.

Going concern assumption assumes that the business with continue to an infinite period of time and it will not end.

Full Disclosure principle requires to disclose all the material facts about business whether the effect is  currently disclosed in financial statements or not.

Matching principle requires to record expense for each revenue earned.

General Accounting Assumption is old and applicable on all the businesses and industry.

Business Entity Assumptions assumes for business calculations that the owners are different from their business, and both are two separate identities.