Archive about 'Basic Accounting Concepts and Regulatory Framework'

Understand The Difference Between Change in Accounting Estimate Versus Change in Accounting Policies

This is a two- part articles which discuss what is Changes in Accounting Estimate and Changes in Accounting Policies.

Change in Accounting Estimate

Basics:

Use of estimate is an integral process of the accounting process.
Use in line with matching concept and conservatism concept
Use of estimate is needed due to the inherent uncertainties in business activities
There is [...]

Understand The Difference Between Principle-based Versus Rule-based Accounting Standards

Difference Between Principle-based Versus Rule-based

Principle-based:

Accounting standards may take the form of general principles, relying on interpretation and judgment by the financial statement preparers before they can be implemented.

Whereas:

Rule-based:

Alternatively, standards may take the form of a series of rules, limiting the flexibility and use of judgment allowed in their implementation.

A Comparison of the Principle-based [...]

Understand The Difference Between Fair Value Versus Historical Cost.

Difference Between Fair Value Versus Historical Cost

Fair Value:

Accounting Standard defined:

Fair value as the amount for which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length transaction.

It is meant to represent market value given a sufficiently robust and efficient market. Where no such market exists, the fair value [...]

Main Qualitative Characteristics Of Financial Statement

UNDERSTANDABLE & USEFUL

Accounting information should be readily understandable to the intended users of the information.

This is a function of both the intended users and the intended uses of the information. Accounting systems that define either the users or uses narrowly may justify more complex information requirements and standards. Accounting systems that envision a broad body [...]

Answer To Financial Accounting Question Paper FA No 4: Test on Accounting Concept & Regulatory Framework

Answer to FA Test Paper FA No 4

Test On Accounting Concept & Regulatory Framework

IDENTIFICATION OF THE VIOLATION OF THE FOLLOWING BASIC ACCOUNTING

(1)

    Historical Cost

Company A reported its fixed assets on its balance sheet at fair market value

(2)

                   Matching Principle

Company A paid $20,000 insurance premium which relates for a period of two years period. It charged [...]

Question To Financial Accounting Question Paper FA No 4: Test on Accounting Concept & Regulatory Framework

Question to FA Test Paper FA No 4

Test On Accounting Concept & Regulatory Framework

IDENTIFICATION OF THE VIOLATION OF THE FOLLOWING BASIC ACCOUNTING

(1)

 ?

Company A reported its fixed assets on its balance sheet at fair market value

(2)

?

Company A paid $20,000 insurance premium which relates for a period of two years period. It charged all this $20,000 out [...]

Answer To Financial Accounting Question Paper FA No 3: Test on Accounting Concept & Regulatory Framework

Answer to FA Test Paper FA No 3

Test On Accounting Concept & Regulatory Framework

IDENTIFICATION OF BASIC ACCOUNTING

(1)

Business Entity

Mr X, the sole proprietor of Company XY does not list his personal house on the balance sheet of Company XY

(2)

Full Disclosure

Company A included a disclosure [...]

Financial Accounting Question Paper FA No 3: Test on Accounting Concept & Regulatory Framework

 

FA Test Paper FA No 3

Test On Accounting Concept & Regulatory Framework

IDENTIFICATION OF BASIC ACCOUNTING

(1)

?

Mr X, the sole proprietor of Company XY does not list his personal house on the balance sheet of Company XY

(2)

?

Company A included a disclosure note describing a lawsuit it is defending even though the suit has not yet been settled

(3)

?

Company [...]

Answer to FA Test No 1 & 2 on Accounting Concepts & Regulatory Framework

Answers To FA Test No 1 & No 2
 

ANSWERS:

Answers To Financial Accounting (FA)Test No 1:
1.  Consistency principle
2.  Matching principle
3.  Business entity concept
4.  Going concern concept
5.  Consistency principle
6.  Money measurement/monetary stability concept
7.  Conservative or Prudence principle
8.  Historical cost principle
9.  Historical cost principle
10  Disclosure principle
11  Accrual principle.
12  Matching principle
13  Accrual principle
Answers To Financial Accounting(FA) Test No 2:
1.  Business [...]

Test on Accounting Concepts & Regulatory Frameworks (FA Test No 2)

Financial Accounting (FA) Test No 2:

Consists of thirteen (13) questions to test your understanding of the basic accounting concepts:

[Refer Answer to FA Answer No 1 &2]

Item No

Name the Concept

QUESTIONS

(1)

?

The success of the company is mainly attributed to the invaluable qualities of three employees, [...]