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Budgets & Financial Plans
Provide the 10 main accounting principles and guidelines and describe each.
The ten accounting principles are described on the Accounting Coach website and are as follows:
Economic Entity Assumption -- This is the idea that a sole proprietor will keep personal and business transaction data and funds separate (Accounting Coach, 2015).
Monetary Unit Assumption -- This is the idea that all transactions recorded will be in U.S. dollars and that only transactions that CAN be reported as such will be done (Accounting Coach, 2015).
Time Period Assumption -- This is the principle that says that economic data will be defined based on specific time horizons such as a number of weeks, months, quarters and/or years (Accounting Coach, 2015).
Cost Principle -- This is the idea that there is a cash or cash equivalent that can and should be assigned to a given activity. For example, a person earning $8 an hour would cost the company $32 if they work four hours (Accounting Coach, 2015).
5) Full Disclosure Principle -- This is the idea that any information important and mundane to what an investor wants to know should be fully included in financial statements rather than being changed or omitted (Accounting...
It asserts that revenues must be matched with expenses and for the same overall time period (Accounting Coach, 2015).
8) Revenue Recognition Principle -- This is the idea, and it is consistent with the accrual basis of accounting, that revenue will be recognized in some form as soon as it is sold, whether it be in cash received, accounts receivable, etc. (Accounting Coach, 2015).
9) Materiality -- This is the idea that some accounting principles can be ignore and violated if the amount in question is very minor and nominal. Rounding to the nearest dollar would be an example (Accounting Coach, 2015).
10) Conservatism - This is the idea that when there are multiple ways to report an item, the amount the benefits the company less will be reported. For example, if one source says an asset is worth $1,000 and another says it's worth $800, the latter should be used if neither can be ruled out (Accounting Coach, 2015).
Question 8:…
References
Accounting Coach. (2015). Accounting Principles -- Explanation -- Accounting Coach. AccountingCoach.com. Retrieved 26 October 2015, from http://www.accountingcoach.com/accounting-principles/explanation
Brown, K. (2015). Arthur Andersen's Fall From Grace Is a Sad Tale of Greed and Miscues. WSJ. Retrieved 26 October 2015, from http://www.wsj.com/articles/SB1023409436545200
Business Dictionary. (2015). What is financial audit? Definition & meaning. BusinessDictionary.com. Retrieved 26 October 2015, from http://www.businessdictionary.com/definition/financial-audit.html
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