1. Requires that accounting standards be followed for all items of significant size. 2. Separates financial information into time periods for reporting purposes. 3. Requires recognition of expenses in the same period as related revenues. 4. Indicates that fair value changes subsequent to purchase are not recorded in the accounts.

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Business

Damian

25 April, 10:49

1. Requires that accounting standards be followed for all items of significant size. 2. Separates financial information into time periods for reporting purposes. 3. Requires recognition of expenses in the same period as related revenues. 4. Indicates that fair value changes subsequent to purchase are not recorded in the accounts.

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Susan Avery · Answer 1

Materiality

1. Requires that accounting standards be followed for all items of significant size.

The accounting rules and principles should be followed to record the operations throughout the year it cannot choose to omit their application for certain trasnactions.

Periodicity Assumption

2. Separates financial information into time periods for reporting purposes

We make the accounting cycle last the same period of time to be able to compare them (usually calendar year)

Expense recognition principles

3. Requires recognition of expenses in the same period as related revenues.

Based on this principles the accounting uses the warranty liabilities, allowance for bad debt equipment all of which generate expenses considering the expense cahs disbursement differs with the time the reveneus are generate

Historic Cost

4. Indicates that fair value changes subsequent to purchase are not recorded in the accounts.

Once the equipment, vehicles or inventory are purchased the accounting will be conservative to evaluate their value. They will only adjust to decreases it, not to increase it.