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Remarks
Reflection “One lie is enough to question all thruths.”
Prepared by:
Name: School:
Position/Designation: Teacher 3 Cebu Province
Division:
Contact Number: Email Address:
Synonym activity
Activity
Application
Information Sheet
“Accounting Concepts and Principles”
Accounting Concepts and Principles are known as the “Generally Accepted Accounting Principles,”
or GAAP serve as the rules for accounting of financial transactions and preparing financial
statements. It’s application of the principles by accountants ensures that financial statements are
both informative and reliable.
• Objectivity principle
– financial statements must be presented with supporting evidence.
Example:
o When the customer paid Jollibee for their order, Jollibee should have a copy of the receipt to
represent as evidence.
• Cost principle
– accounts should be recorded initially at cost.
Example:
o When Jollibee buys a cash register, it should record the cash register at its price when they
bought it.
o When a company purchases a laptop, it should be recorded at the price it was purchased.
• Matching principle
– cost should be matched with the revenue generated.
Example:
o When you provide tutorial services to a customer and there is a transportation cost incurred
related to the tutorial services, it should be recorded as an expense for that period.
• Disclosure principle
– all relevant and material information should be reported.
Example:
The company should report all relevant information.
• Conservatism principle
– also known as prudence. In case of doubt, assets and income should not be overstated
while liabilities and expenses should not be understated.
Example:
o In case of doubt, expenses should be recorded at a higher amount. Revenue should be recorded
at a lower amount.
• Materiality principle
– in case of assets that are immaterial to make a difference in the financial statements, the
company should instead record it as an expense.
Example:
o A school purchased an eraser with an estimated useful life of three years. Since an eraser is
immaterial relative to assets, it should be recorded as an expense.