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Which accounting concept or principle specifically states that you should record transactions at amounts that can be verified?
Wiki User
∙ 14y ago
revenue recognition
Wiki User
∙ 14y ago
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What does reliability mean in terms of accounting?
Reliability is a basic accounting principle, known also as the objectivity principle. The principle means that only transactions that can be verified will be entered into a company's books.
What do you understand by the concept of conservatism . Why is it also called the concept of prudence. Why is it not applied as strongly today as it used to be in the Past?
"conservatism in the balance sheet is of dubious value if attained at the expense of conservatism in the income statement, which is far more significant." A branch of accounting that requires a high degree of verification before making a legal claim to any profit. Accounting conservatism will recognize all probable losses as they are discovered and most expenditures as they are incurred. Revenue will be deferred until it is verified. Having strict revenue-recognition criteria is one of the most common forms of accounting conservatism.
What are the main characteristics of accounting information?
Understandability This implies the expression, with clarity, of accounting information in such a way that it will be understandable to users - who are generally assumed to have a reasonable knowledge of business and economic activities Relevance This implies that, to be useful, accounting information must assist a user to form, confirm or maybe revise a view - usually in the context of making a decision (e.g. should I invest, should I lend money to this business? Should I work for this business?) Consistency This implies consistent treatment of similar items and application of accounting policies Comparability This implies the ability for users to be able to compare similar companies in the same industry group and to make comparisons of performance over time. Much of the work that goes into setting accounting standards is based around the need for comparability. Reliability This implies that the accounting information that is presented is truthful, accurate, complete (nothing significant missed out) and capable of being verified (e.g. by a potential investor). Objectivity This implies that accounting information is prepared and reported in a "neutral" way. In other words, it is not biased towards a particular user group or vested interest.
Explain any four accounting concepts with examples?
Accounting concepts and conventionsIn drawing up accounting statements, whether they are external "financial accounts" or internally-focused "management accounts", a clear objective has to be that the accounts fairly reflect the true "substance" of the business and the results of its operation.The theory of accounting has, therefore, developed the concept of a "true and fair view". The true and fair view is applied in ensuring and assessing whether accounts do indeed portray accurately the business' activities.To support the application of the "true and fair view", accounting has adopted certain concepts and conventions which help to ensure that accounting information is presented accurately and consistently.Accounting ConventionsThe most commonly encountered convention is the "historical cost convention". This requires transactions to be recorded at the price ruling at the time, and for assets to be valued at their original cost.Under the "historical cost convention", therefore, no account is taken of changing prices in the economy.The other conventions you will encounter in a set of accounts can be summarised as follows:Monetary measurementAccountants do not account for items unless they can be quantified in monetary terms. Items that are not accounted for (unless someone is prepared to pay something for them) include things like workforce skill, morale, market leadership, brand recognition, quality of management etc.Separate EntityThis convention seeks to ensure that private transactions and matters relating to the owners of a business are segregated from transactions that relate to the business.RealisationWith this convention, accounts recognise transactions (and any profits arising from them) at the point of sale or transfer of legal ownership - rather than just when cash actually changes hands. For example, a company that makes a sale to a customer can recognise that sale when the transaction is legal - at the point of contract. The actual payment due from the customer may not arise until several weeks (or months) later - if the customer has been granted some credit terms.MaterialityAn important convention. As we can see from the application of accounting standards and accounting policies, the preparation of accounts involves a high degree of judgement. Where decisions are required about the appropriateness of a particular accounting judgement, the "materiality" convention suggests that this should only be an issue if the judgement is "significant" or "material" to a user of the accounts. The concept of "materiality" is an important issue for auditors of financial accounts.Accounting ConceptsFour important accounting concepts underpin the preparation of any set of accounts:Going ConcernAccountants assume, unless there is evidence to the contrary, that a company is not going broke. This has important implications for the valuation of assets and liabilities.ConsistencyTransactions and valuation methods are treated the same way from year to year, or period to period. Users of accounts can, therefore, make more meaningful comparisons of financial performance from year to year. Where accounting policies are changed, companies are required to disclose this fact and explain the impact of any change.PrudenceProfits are not recognised until a sale has been completed. In addition, a cautious view is taken for future problems and costs of the business (the are "provided for" in the accounts" as soon as their is a reasonable chance that such costs will be incurred in the future.Matching (or "Accruals")Income should be properly "matched" with the expenses of a given accounting period.Key Characteristics of Accounting InformationThere is general agreement that, before it can be regarded as useful in satisfying the needs of various user groups, accounting information should satisfy the following criteria:CriteriaWhat it means for the preparation of accounting informationUnderstandabilityThis implies the expression, with clarity, of accounting information in such a way that it will be understandable to users - who are generally assumed to have a reasonable knowledge of business and economic activitiesRelevanceThis implies that, to be useful, accounting information must assist a user to form, confirm or maybe revise a view - usually in the context of making a decision (e.g. should I invest, should I lend money to this business? Should I work for this business?)ConsistencyThis implies consistent treatment of similar items and application of accounting policiesComparabilityThis implies the ability for users to be able to compare similar companies in the same industry group and to make comparisons of performance over time. Much of the work that goes into setting accounting standards is based around the need for comparability.ReliabilityThis implies that the accounting information that is presented is truthful, accurate, complete (nothing significant missed out) and capable of being verified (e.g. by a potential investor).ObjectivityThis implies that accounting information is prepared and reported in a "neutral" way. In other words, it is not biased towards a particular user group or vested interest
Why does it take so long for a check to clear?
funds have to be verified
What does reliability mean in terms of accounting?
Reliability is a basic accounting principle, known also as the objectivity principle. The principle means that only transactions that can be verified will be entered into a company's books.
What is a principle that has been scientifically verified?
One principle that has long been scientifically verified is that of gravity. Scientists agree that the law of gravity operates on earth.
An is a principle that has been scientifically verified?
theory
The cost principle is the basis for preparing financial statements because it is?
The cost principles is the basis for preparing financial statements because it is? B. Relevant and objectively measured, and verified.
Buy Verified PayPal Accounts?
Buy Verified PayPal Accounts
How can you verify that a person is certifiable?
Whether a person is certifiable can be verified by checking the person's bank documents. Should there be enough funds on the bank account for the specific deposit or payment, the person is seen as certifiable for banking transactions.
The Accounts Are Verified by Which Documents?
guilty guys
Why isn't KevJumba verified on Twitter?
They are not verified because they did not do what they needed to do to be verified.
How do you use verified in a sentence?
I have verified that you do not know how to use verified in a sentence.
Does the correspondence principle have application to macroscopic events in the everyday macroworld?
The correspondence principle has applications to macroscopic events in the everyday macro-world. This principle is a general rule not only good for science but for all good theory - even in areas as far removed from science as government, religion, and ethics. If a new theory is valid, it must account for the verified results of the old theory.
What does the word verified mean?
Verified means that the item is checked. If it is checked and passed, then it is verified.
Does Kobe have Twitter verified?
He doesn't have a verified account.
