Identify the accounting assumption/principle involved in each of the following situations: i. It facilitates intra-firm and inter-firm comparison. ii. Only financial transactions are recorded in the books of accounts. iii. An asset is shown in the balance sheet at its book value. iv. The economic life of an enterprise is split into periodic intervals. v. Only those items should be disclosed that have a significant effect or are relevant to the users. vi. This concept facilitates the distinction between current and non-current assets, long-term and short-term liabilities. vii. For every debit, there is a credit of an equal amount in one or more accounts and vice-versa. viii. Provision is made for all known liabilities and losses. ix. Expenses incurred in an accounting period should be matched with the revenues recognized in that period.
Added by Mireia C.
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Consistency Principle: It facilitates intra firm and inter firm comparison. ii. Monetary Measurement Concept: Only financial transactions are recorded in the books of accounts. iii. Historical Cost Principle: An asset is showed in the balance sheet at its book Show more…
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Principles of Accounting Volume 1: Financial Accounting
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