Legacy of Wisdom Academy of Dasmariñas, Inc.

Golden City, Salawag, Dasmariñas City

SY 2020 – 2021

Fundamentals of Accounting
LESSON 6- ACCOUNTING PRINCIPLES
ACTIVITY NO. 6
Name: Delos Reyes Gianna Date:________________

Economic Entity assumptions H. Cost principle

Accrual Basis Assumption
Going concern Assumption
Monetary Unit Assumption
Time- Period Assumption
Conservatism Principle
GAAP
I. Full disclosure Principle
J. Matching Principle
K Revenue Recognition Principle
L. Materiality Principle
M. Objectivity Principle

Directions: Identify the accounting assumption or principle that suits the statement.

Full Disclosure1. Ensures that financial information is reported at regular intervals.

Accrual basis assumption2. The assumption adheres to the revenue recognition, matching
and cost principles.

GAAP3. The framework, rules and guidelines of the financial accounting profession
with the purpose of standardizing the accounting concept, principles and procedures.

Accrual Accounting Records4. It requires that all business transactions and other events are
recognized in the accounting records when they occur , rather than when the cash or
equivalent is received or paid

Economic Entity5. Any personal transactions of its owner shall not be recorded in the
business accounting book, and vice versa.

Going Concern6. This assumes that a company will continue to exist long enough to
carry out its objectives and commitments and will not liquidate in the foreseeable future.
 Time- Period Assumption. The life of an economic entity can be divided into artificial
time period for the purpose of providing periodic reports on the economic activities of the
entity

Monetary Unit. This assumption disregards any inflation or deflation in the economy in
which the entity operates.

Cost principle9. Assets are recorded at cost, which equal to the value exchanged at the
time of their acquisition.

Accrual basis accounting10. Important information to users of financial statements should

be disclosed within the statements or in the notes to the statement.

Going Concern. This accounting principle requires companies to use the accrual basis of
accounting.

Revenue Recognition12. Revenue is recognized when the earning process is virtually

complete and an exchange transaction has occurred.

Materiality 13. This principle allows errors or violations of accounting valuation

involving immaterial and small amounts of recorded business transactions.

Conservatism14. The basic accounting principle that leads accountants to anticipate or

disclose losses, but does not allow similar actions for gains.

Consistency15. Accountants are expected to apply the same accounting principles,

procedures, and practices from year to year.