Answer to the Question no. 02
a) Cost Principle: The cost principle is an accounting principle that records assets at their
respective cash amounts at the time the asset was purchased or acquired.
b) Economic Entity Assumption: The economic entity assumption is an accounting
principle that separates the transactions carried out by the business from its owner. It can
also refer to the separation between various divisions in a company. Each unit maintains
its own accounting records specific to the business operations.
c) Monetary Unit Concept: The monetary unit concept is an accounting principle that
assumes business transactions or events can be measured and expressed in terms of
monetary units and the monetary units are stable and dependable.
d) Going Concern: Going concern is an accounting term for a company that has the
resources needed to continue operating indefinitely until it provides evidence to the
contrary. This term also refers to a company's ability to make enough money to stay
afloat or to avoid bankruptcy.
e) Periodicity: Periodicity is an accounting assumption made by accountants so that a
company's complex and ongoing activities can be divided up into annual, quarterly, and
monthly amounts that will be reported on the respective financial statements.
f) Revenue Recognition Principle: Revenue recognition is a generally accepted
accounting principle (GAAP) that identifies the specific conditions in which revenue is
recognized and determines how to account for it.
g) Matching Concept: Matching concept is an accounting principle for recording revenues
and expenses. It requires that a business records expenses alongside revenues earned.
h) Accural Basis of Accounting: Accrual accounting is a financial accounting method that
allows a company to record revenue before receiving payment for goods or services sold
and record expenses as they are incurred.
i)
Dual Aspect of Accounting: The dual aspect concept states that since every transaction
has a dual effect, the accounting records must reflect the same to show the accurate
movement of funds. For instance, a buyer pays cash in return for a purchased item while
the seller gains cash for the sold item. It makes a transaction dual, affecting two accounts
simultaneously; hence, it should be registered likewise.
Answer to the Question no. 02
Baker Corporation
For the year ended on December 31, 2015