1. GAAPs

Identify the GAPP for each definition. Use the word list provided.

GAAP

Definition

GAAPs

1

Revenue will be recorded in the books at the time the transaction is completed, not necessarily when cash is received.

Business Entity Concept

Conservatism

Consistency

Continuing Concern/ Going Concern

Cost Principle

Full Disclosure

Matching Principle

Materiality

Objectivity Principle

Revenue Recognition

Time Period Concept

2

Items are recorded in the books at the price paid by the purchaser, and do not change from their original value.

3

Costs related to income earned must be recorded in the same accounting period as the revenue it generated.

4

All information that affects the interpretation of a company's financial statements must be included with those statements. Items that do not affect the ledger accounts directly should appear in footnotes to the financial statements.

5

Accounting takes place over specific fiscal periods of fixed length, so as to allow for comparisons and analysis from year to year.

6

Accounting must be done on the basis of objective evidence. Different people looking at the same evidence will arrive at the same values for the transaction if you've followed this principle.

7

Accounting for a business should be fair and reasonable, and evaluations, opinions and estimates should be done in such a way that they neither overstate nor understate the affairs of the business.

8

Accounting for a business or organization must be kept separate from the personal affairs of its owner or any other organization.

9

Accountants must use GAAPs except when doing so would be prohibitively expensive, difficult, and would make little significant difference in the final reported results of the business.

10

Accountants must apply the same methods and procedures from period to period. Any changes must be clearly explained on the financial statements.

11

A business will continue to operate unless it is known that such is not the case.