Question

Identify the accounting assumption/principle involved in each of the following situation-

i.It facilitates intra firm and inter firm comparison.

ii. Only financial transactions are recorded in the books of accounts.

iii.An asset is showed in the balance sheet at its book value.

iv. Economic life of an enterprise is split into periodic intervals.

v. Only those items should be disclosed that have significant effect or are relevant to the

users.

vi. This concept facilitates the distinction between current and non current assets, long term

and short term liabilities.

vi. For every debit , there is a credit of equal amount in one or more accounts and vice-

versa.

vii. Provision is made for all known liabilities and losses.

viii. Expenses incurred in an accounting period should be matched with the revenues

recognised in that period.​

Answer 1

Answer:

i. comparability

Explanation:

ii. financial accounting

iii. market value

iv. accounting period

v. relevancy

vi materiality

vii. Dual concept

viii. Prudence principle

ix. matching principle

Answer 2

Answer:

■ Accounting Assumptions / Principles :

i ) It facilitates intra firm and inter firm comparison.

• Comparability

ii ) Only financial transactions are recorded in the books of accounts.

• Money measurement Concept

iii ) An asset is showed in the balance sheet at its book value.

• Cost Concept / Historical Cost Concept

iv ) Economic life of an enterprise is split into periodic intervals.

• Accounting Period Concept

v ) Only those items should be disclosed that have significant effect or are relevant to the users.

• Relevance

vi ) This concept facilitates the distinction between current and non current assets, long term and short term liabilities.

• Materiality Concept

vii ) For every debit , there is a credit of equal amount in one or more accounts and vice-versa.

• Dual Aspect Concept

viii ) Provision is made for all known liabilities and losses.

• Conservation concept

ix ) Expenses incurred in an accounting period should be matched with the revenues recognised in that period.

• Matching Concept

■ Other Accounting Principles :

• Business Entity Concept

• Going Concern Concept

• Accounting Period Concept

• Revenue Recognition Concept

• Full Disclosure Concept

• Consistency Concept

• Materiality Concept

• Objectivity Concept