會計學概念問題

(a) accrual concept: all assets including fixed assets, inventory, etc are reported at cost, even though the market value appreciates.

(b) matching principle: all sales revenue are recorded once the transaction is concluded, for example, signing contract, goods delivered, or services rendered. No matter the transaction is on cash basis or on credit. Same as expenses, once incurred, no matter it is paid or not, must be recognised as expenses in profit and loss account.

(c) one company must have one accounting method. For example, depreciation method (straight line, reducing balance, etc), inventory costing method (FIFO, weighted average, etc).

(d) matching principle: same as (b) above, prepaid means not yet incurred, therefore, not recognised in the profit and loss account.

(e) separate entity: the company is a legal entity, same as the owner. So the owner's assets and expenses cannot be recorded in the company's book.

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(a) A motor vehicle is reported at$120,000, what it cost 2 years ago, even though its current market value is$150,000.Historical concept, only record the historical cost in the account and disregard the current market value.
(b) A food trading company givescredit to some special customers on the sale of food. Although the invoicessent them are still unpaid, such amount is still reported as sales revenue inthe trading and profit and loss account.

Revenue Recognition concept. the sales should be recognized when the risk of the goods have been passed to the customer.
(c) When a business has once usedthe straight line method to calculate the deprecation of equipment, it will usethe same method to calculate the deprecation of it in the coming years.Consistency concept. The method used should be consistently applied.
(d) The owner cannot record theprepaid insurance as “insurance expense” in the trading and profit and lossaccount.Matching Concept. The prepayment of insurance are not incurred as expenses since these expenses are not incurred in this year and not matched against the income for this year.
(e) The house privately owned bythe owner could not be recorded in the balance sheet of the company he owned.
Separate entity concept. Private items should not be included in the company account as they are separate entity.