Accounting concept

Question 1

Explain accounting entity concept?

Answer 1

Business is treated as a separate entity from its owner.

Question 2

Explain Going Concern

Answer 2

Business entity is assumed to operate indefinitely.

Question 3

Explain Accounting period

Answer 3

The life of the business divided into specific periods of time for the purpose of preparing financial reports.

Question 4

Explain Historical Cost

Answer 4

All transaction should be recorded at its original cost

Question 5

Explain Monetary concept

Answer 5

Only transactions which can be expressed in monetary terms are to be recorded.

Question 6

Explain Objectivity

Answer 6

There must always be objective verifiable evidence for reporting any accounting information. Financial statement should be free of personal bias and be based on facts rather than opinion.