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Accounting Activity

The document explains key accounting principles that guide the recording and reporting of financial transactions, ensuring consistency and reliability in financial statements. It outlines five specific principles: Matching, Business Entity, Consistency, Duality, and Going Concern, along with their definitions and examples. Additionally, it provides a brief quiz to identify these principles based on their descriptions.

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4 views2 pages

Accounting Activity

The document explains key accounting principles that guide the recording and reporting of financial transactions, ensuring consistency and reliability in financial statements. It outlines five specific principles: Matching, Business Entity, Consistency, Duality, and Going Concern, along with their definitions and examples. Additionally, it provides a brief quiz to identify these principles based on their descriptions.

Uploaded by

rojasmeza.ja
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Accounting activity

1. Explanation of an Accounting Principle

An accounting principle is a fundamental guideline that governs how financial transactions


are recorded, reported, and interpreted. These rules ensure consistency, reliability, and
comparability in financial statements, enabling informed decision-making by businesses and
stakeholders.

2. Mentioned Accounting Principles

- Matching Principle

- Business Entity Principle

- Consistency Principle

- Duality Principle

- Going Concern Principle

3.Completed Chart

PRINCIPLE DEFINITION EXAMPLE REPRESENTATION (picture)

Revenues and their If a company earns revenue A picture showing revenue


Matching related expenses in June, it must also record and expense arrows
principle should be recorded in the expenses related to that pointing to the same time
the same period. revenue in June. period

The business is
The owner’s personal car is
Business treated as separate A person and a building
not recorded as a business
entity from its owner or other with a line between them
asset.
businesses.

If a business uses the


The same accounting
straight-line method for A checklist with the same
Consistency methods should be
depreciation, it should method repeated
used each year.
continue using it each year.

Every transaction
When goods are bought for
affects at least two A balance scale with two
Duality cash, inventory increases
accounts: one debit sides: debit and credit
and cash decreases.
and one credit.

Assumes the business A company doesn’t plan to


A road stretching into the
Going will continue to close and continues to buy
distance or a calendar
concern operate for the equipment and make long-
showing months ahead
foreseeable future. term plans.
4. What principle are we describing?

a. It implies that the business will continue to operate in the near future which is at least 12
months.
Going concern

b. It requires two entries to be posted for every transaction. One account should be debited
and one account should be credited.
Duality

c. It requires that the affairs of the business are treated as being separate from the non-
business activities of its owner(s).
Business entity

d. It requires a business to record in its financial statements, revenues and any related
expenses in the same accounting period.
Matching

e. It states that similar transactions should be recorded using the same accounting method
year after year. This creates consistency for users of accounting information.
Consistency

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