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level: Basic Principles

Questions and Answers List

Question	Answer
Accounting records and statements are most reliable data available so that they will be as accurate and as useful as possible.	Objectivity Principle
Acquired assets should be recorded at their ACTUAL COST and not management thinks they are worth as at reporting date.	Historical Cost Principle
Revenue is recognized in the accounting period when goods are delivered or services are rendered or performed	Revenue Recognition Principle
Expenses should be recognized in the accounting period in which goods and services are used up to produce revenue and not when entity pays for those goods and services	Expense Recognition Principle
All relevant information would affect the user's understanding and assessment of the accounting entity be disclosed in the financial statements.	Adequate Disclosure
It depends on the size and nature of the item judged in the particular circumstances of its omission	Materiality
Firms should use the same accounting method from period to period to achieve comparability over time within a single enterprise.	Consistency Principle