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Monday, August 15, 2011

Conceptual Framework For Financial Accounting

                                                                         Part-A
                                                                   Brief Questions
                                                                        2nd Part

9.What do you mean by Going concern assumption?
Ans:The assumption that the enterprise will continue in operation long enough to carry out its existing objectives and commitments.

10.What is Installment method?
Ans:A method of recognizing revenue using the cash basis, each collection consists  of a partial recovery of cost of goods sold and partial gross profit from the sale.

11.What is International Accounting Standards Board (IASB)?
Ans:An accounting organization whose purpose is to formulate and publish international accounting standards and to promote their acceptance worldwide.

12.What is Matching Principle?
Ans:The principle that expenses should be matched with revenues in the period when efforts are expended to generate revenues.

13.What is Materiality?
Ans:The constrant of determining if an item is important enough to likely influence the decision of a reasonably prodent investor or creditor.

14.All business transactions are recorded in terms of money.This concept is termed the___________
Ans:Monetary unit.

15.Which assumption is given credibility to the cost principle?
Ans:Going Concern assumption.

16.What is business entity assumption?
Ans:Business entity assumption states the economic events can identified with a particular unit of accountability.

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