Match each accounting treatment or transaction scenario on the left with the governing accounting concept or convention on the right.
- Valuing closing inventory at the lower of cost and net realizable value to avoid overstating net profit and asset values.Prudence Concept
- Recognizing outstanding electricity charges incurred during the financial period as an expense before cash settlement.Accrual Concept
- Maintaining the same reducing balance method of depreciation for motor vehicles from one accounting period to the next.Consistency Convention
- Omitting key non-financial attributes such as workforce expertise and brand reputation from the formal financial statements.Money Measurement Concept
Cevap
Valuing inventory at lower of cost and net realizable value matches Prudence Concept; recognizing accrued expenses incurred matches Accrual Concept; maintaining consistent depreciation methods year-to-year matches Consistency Convention; omitting non-quantifiable workforce skills matches Money Measurement Concept.
Each accounting transaction scenario aligns directly with its underlying principle: Prudence avoids overstating profit/assets; Accrual records expenses incurred regardless of cash flow; Consistency requires uniform accounting policies over time; Money Measurement restricts recordkeeping to monetary units.
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Anahtar Kavram
Accounting Concepts and Conventions