Accounting 1 Reviewer

1. A business enterprise is separate and distinct from its owner or investor.

-Business Entity Principle

2. Business is expected to continue indefinitely.

-Going Concern Principle

3. A business should report the financial results of its activities over a standard period of time.

-Time Period Principle

4. Amounts are stated into a single monetary unit.

-Monetary Unit Principle

5. Financial statements must be presented with supporting evidence.

-Objectivity Principle

6. Accounts should be recorded initially at cost.

-Cost Principle

7. Revenue should be recognized when earned regardless of collection and expenses.

-Accrual Accounting Principle

8. Revenue is recorded when collected and expenses should be recorded when paid.

-Cash Basis Principle

9. Cost should be matched with the revenue generated.

-Matching Principle

10. All relevant and material information should be reported.

-Disclosure Principle

11. Also known as prudence.

-Conservatism Principle
12. In case of doubt, assets and income should not be overstated while liabilities and expenses

should not be understated.

-Conservatism Principle

13. In case of assets that are immaterial to make a difference in the financial statements, the

company should instead record it as an expense.

-Materiality Principle

14. These are defined as “resources controlled by the entity as a result of past transaction and

events from which future economic benefits are expected to flow the entity”.

-Assets

15. These are “present obligations of the entity arising from past transactions and events, the

settlement of which is expected to result in an outflow from the entity of resources

embodying economic benefits”.

-Liabilities

16. It is “the residual interest in the asset of the entity after deducting all of its liabilities”.

-Equity

17. It is resulting amount when the total liabilities are subtracted from the total assets.

-Equity