BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Revenue recognition principle
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Going concern principle
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Monetary unit value
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Business entity principle
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Cost principle
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Detailed explanation-1: -Generally accepted accounting principles (GAAP) require that revenues are recognized according to the revenue recognition principle, a feature of accrual accounting. This means that revenue is recognized on the income statement in the period when realized and earned-not necessarily when cash is received.
Detailed explanation-2: -GAAP stipulates that revenues are recognized when realized and earned, not necessarily when received.
Detailed explanation-3: -Cost-recoverability method Under this method, which is the most conservative revenue recognition method, you can recognize revenue only after you have recouped all the costs associated with the contract. That could be long after the contract is otherwise completed and performance obligations have all been satisfied.
Detailed explanation-4: -Principle of Consistency: Consistent standards are applied throughout the financial reporting process. Principle of Sincerity: GAAP-compliant accountants are committed to accuracy and impartiality. Principle of Permanence of Methods: Consistent procedures are used in the preparation of all financial reports.