Match each of the numbered descriptions with the principle or assumption it best reflects. Enter the letter for the appropriate principle or assumption in the blank space next to each description.
Principles and Assumptions
- General accounting principle
- Historical Cost principle
- Business entity assumption
- Revenue recognition principle
- Matching (expense recognition) principle
- Going-concern assumption
- Full disclosure principle
- Usually created by a pronouncement from an authoritative body.
- Financial statements reflect the assumption that the business continues operating.
- Every business is accounted for separately from its owner or owners.
- Revenue is recognized when earned.
- Information is based on actual costs incurred in transactions.
- A company records the expenses incurred to generate the revenues reported.
- A company reports details behind financial statements that would impact users’ decisions.