Exam (elaborations)
FABM 1, Chapter 6 (Accounting Principles)
- Course
- Institution
FABM 1, Chapter 6 (Accounting Principles)
[Show more]
Content preview
UFABM 1, Chapter 6 (AccountingPrinciples)
Business entity principle - a business enterprise is separate and distinct from its owner or investor.
Examples:
If the owner has a barber shop, the cash of the barber shop should be reported separately from
personal cash.
The owner had a business meeting with a prospective client. The expenses that come with that meeting
should be
part of the company's expenses. If the owner paid for gas for his personal use, it should not be included
as part of
the company's expenses.
Going concern principle - business is expected to continue indefinitely. (Accounting lang may FOREVER).
Example: When preparing financial statements, you should assume that the entity will continue
indefinitely
Time period principle - financial statements are to be divided into specific time intervals. (Ung ngayon,
ngayon!
Ung dati, nakalipas na yun. Wag mo na balikan Babes!)
Example:
Philippine companies are required to report financial statements annually. (January 1 - December 31)
It may also be required to report in a monthly, quarterly, or semi-annually.
The salary expenses from January to December 2015 should only be reported in 2015.
Monetary unit principle - amounts are stated into a single monetary unit. (Pesos lang ditto sa PINAS)
Example:
Jollibee should report financial statements in pesos even if they have a store in the United States.
IHOP should report financial statements in dollars even if they have a branch here in the Philippines
because it's
a USA company.
Objectivity principle - financial statements must be presented with supporting evidence. (Hindi pwedeng
bintang ka lang ng bintang, dapat may proweba ka.)
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller knowledgeNest. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $7.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
82215 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now