accounting class: what are the 12 accounting principles?

Question

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Answer 1

1. Economic Entity Assumption
2. Monetary Unit Assumption
3. Time Period Assumption
4. Cost Principle
5. Full Disclosure Principle
6. Going Concern Principle
7. Matching Principle
8. Revenue Recognition Principle
9. Materiality
10. Conservatism
11. Accrual basis
In order to meet their objectives, financial statements are prepared on the accrual basis of accounting. Under this basis, the effects of transactions and other events are recognised when they occur (and not as cash or its equivalent is received or paid) and they are recorded in the accounting records and reported in the financial statements of the periods to which they relate. Financial statements prepared on the accrual basis inform users not only of past transactions involving the payment and receipt of cash but also of obligations to pay cash in the future and of resources that represent cash to be received in the future. Hence, they provide the type of information about past transactions and other events that is most useful to users in making economic decisions.

12. Comparability
Users must be able to compare the financial statements of an enterprise through time in order to identify trends in its financial position and performance. Users must also be able to compare the financial statements of different enterprises in order to evaluate their relative financial position, performance and changes in financial position. Hence, the measurement and display of the financial effect of like transactions and other events must be carried out in a consistent way throughout an enterprise and over time for that enterprise and in a consistent way for different enterprises.
An important implication of the qualitative characteristic of comparability is that users be informed of the accounting policies employed in the preparation of the financial statements, any changes in those policies and the effects of such changes. Users need to be able to identify differences between the accounting policies for like transactions and other events used by the same enterprise from period to period and by different enterprises. Compliance with Financial Reporting Standards, including the disclosure of the accounting policies used by the enterprise, helps to achieve comparability.
The need for comparability should not be confused with mere uniformity and should not be allowed to become an impediment to the introduction of improved accounting standards. It is not appropriate for an enterprise to continue accounting in the same manner for a transaction or other event if the policy adopted is not in keeping with the qualitative characteristics of relevance and reliability. It is also inappropriate for an enterprise to leave its accounting policies unchanged when more relevant and reliable alternatives exist.
Because users wish to compare the financial position, performance and changes in financial position of an enterprise over time, it is important that the financial statements show corresponding information for the preceding periods.

For write-ups of nos. 1 to 10, click on the link below.

Answer 2

FOR FIRST Q: a) - Opening retained earnings - Loss - dividends = 6000 FOR SECOND Q: c) - Total of three years' profit (200000) - Closing balance (120000) = Dividends paid (80000) FOR THIRD Q: b) - TRUE FOR FORTH Q: a) - amounts can be ignored if the impact does not impact on the decision making of investors FOR FIFTH Q: Answer can not be given since total figure of sales is missing Hope it helps!

Answer 3

check here http://www.stanford.edu/~mikefan/metrics/gaap.html and here http://highered.mcgraw-hill.com/sites/0072423390/student_view0/ hope this helps.