Bookkeeping Rules
Matching exercise
Match the items on the right to the items on the left.
Check
Business Economic Entity Rule
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Allows omitting insignificant information from financial reports
Requires transactions to be measured in monetary units
Requires offsetting the revenues earned with the expenses incurred
Report values lower than cost for inventories and marketable securities
Requires that revenues be recorded when actually earned
Dividing up & reporting results for periods of operation such as years
Assumes that a business will continue indefinitely
Requires every business to be accounted for separately
Requires applying the same accounting methods in each period
Requires following the practices of similar types of businesses
Requires that assets are recorded at their original cost
Historical Cost Rule
???
Allows omitting insignificant information from financial reports
Requires transactions to be measured in monetary units
Requires offsetting the revenues earned with the expenses incurred
Report values lower than cost for inventories and marketable securities
Requires that revenues be recorded when actually earned
Dividing up & reporting results for periods of operation such as years
Assumes that a business will continue indefinitely
Requires every business to be accounted for separately
Requires applying the same accounting methods in each period
Requires following the practices of similar types of businesses
Requires that assets are recorded at their original cost
Revenue Realization and Recognition Rule
???
Allows omitting insignificant information from financial reports
Requires transactions to be measured in monetary units
Requires offsetting the revenues earned with the expenses incurred
Report values lower than cost for inventories and marketable securities
Requires that revenues be recorded when actually earned
Dividing up & reporting results for periods of operation such as years
Assumes that a business will continue indefinitely
Requires every business to be accounted for separately
Requires applying the same accounting methods in each period
Requires following the practices of similar types of businesses
Requires that assets are recorded at their original cost
Matching Rule
???
Allows omitting insignificant information from financial reports
Requires transactions to be measured in monetary units
Requires offsetting the revenues earned with the expenses incurred
Report values lower than cost for inventories and marketable securities
Requires that revenues be recorded when actually earned
Dividing up & reporting results for periods of operation such as years
Assumes that a business will continue indefinitely
Requires every business to be accounted for separately
Requires applying the same accounting methods in each period
Requires following the practices of similar types of businesses
Requires that assets are recorded at their original cost
Going-Concern Rule
???
Allows omitting insignificant information from financial reports
Requires transactions to be measured in monetary units
Requires offsetting the revenues earned with the expenses incurred
Report values lower than cost for inventories and marketable securities
Requires that revenues be recorded when actually earned
Dividing up & reporting results for periods of operation such as years
Assumes that a business will continue indefinitely
Requires every business to be accounted for separately
Requires applying the same accounting methods in each period
Requires following the practices of similar types of businesses
Requires that assets are recorded at their original cost
Monetary Rule
???
Allows omitting insignificant information from financial reports
Requires transactions to be measured in monetary units
Requires offsetting the revenues earned with the expenses incurred
Report values lower than cost for inventories and marketable securities
Requires that revenues be recorded when actually earned
Dividing up & reporting results for periods of operation such as years
Assumes that a business will continue indefinitely
Requires every business to be accounted for separately
Requires applying the same accounting methods in each period
Requires following the practices of similar types of businesses
Requires that assets are recorded at their original cost
Conservative Rule
???
Allows omitting insignificant information from financial reports
Requires transactions to be measured in monetary units
Requires offsetting the revenues earned with the expenses incurred
Report values lower than cost for inventories and marketable securities
Requires that revenues be recorded when actually earned
Dividing up & reporting results for periods of operation such as years
Assumes that a business will continue indefinitely
Requires every business to be accounted for separately
Requires applying the same accounting methods in each period
Requires following the practices of similar types of businesses
Requires that assets are recorded at their original cost
Period Rule
???
Allows omitting insignificant information from financial reports
Requires transactions to be measured in monetary units
Requires offsetting the revenues earned with the expenses incurred
Report values lower than cost for inventories and marketable securities
Requires that revenues be recorded when actually earned
Dividing up & reporting results for periods of operation such as years
Assumes that a business will continue indefinitely
Requires every business to be accounted for separately
Requires applying the same accounting methods in each period
Requires following the practices of similar types of businesses
Requires that assets are recorded at their original cost
Industry Practice Rule
???
Allows omitting insignificant information from financial reports
Requires transactions to be measured in monetary units
Requires offsetting the revenues earned with the expenses incurred
Report values lower than cost for inventories and marketable securities
Requires that revenues be recorded when actually earned
Dividing up & reporting results for periods of operation such as years
Assumes that a business will continue indefinitely
Requires every business to be accounted for separately
Requires applying the same accounting methods in each period
Requires following the practices of similar types of businesses
Requires that assets are recorded at their original cost
Consistency Rule
???
Allows omitting insignificant information from financial reports
Requires transactions to be measured in monetary units
Requires offsetting the revenues earned with the expenses incurred
Report values lower than cost for inventories and marketable securities
Requires that revenues be recorded when actually earned
Dividing up & reporting results for periods of operation such as years
Assumes that a business will continue indefinitely
Requires every business to be accounted for separately
Requires applying the same accounting methods in each period
Requires following the practices of similar types of businesses
Requires that assets are recorded at their original cost
Materiality Rule
???
Allows omitting insignificant information from financial reports
Requires transactions to be measured in monetary units
Requires offsetting the revenues earned with the expenses incurred
Report values lower than cost for inventories and marketable securities
Requires that revenues be recorded when actually earned
Dividing up & reporting results for periods of operation such as years
Assumes that a business will continue indefinitely
Requires every business to be accounted for separately
Requires applying the same accounting methods in each period
Requires following the practices of similar types of businesses
Requires that assets are recorded at their original cost
Check
OK