ACCTG31 - CONCEPTUAL FRAMEWORKS AND ACCOUNTING STANDARDS
CONCEPTUAL FRAMEWORK FOR FINANCIAL
REPORTING PART II
(REVIEW OF QUIZ)
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Matching Principle - Includes estimating bad debts
expenses
Materiality rule of relevance - does not necessarily
imply that can be ignored
Preparation of consolidated financial statements based on separate entity assumption
Accounting measurement that may be made with the
greatest degree of objectivity- the cost of the land
owned as of the year end
Assets are valued at cost because cost may be
determined more objectively than its market value
Realization principle- revenue can only be recognized
once the underlying goods or services associated with
the revenue have been delivered or rendered,
respectively. Thus, revenue can only be recognized
after it has been earned.
- Can only record revenue when the item is
received and the process is complete
Installment method of revenue recognition - used
primarily for income tax purposes because it postpones
the recognition of income
Matching principle- determine when the cost of an
asset should be charged to expense
Cost principle and objectivity principle- most closely
related