01-21-2007, 07:16 AM
I am not an advanced level student but I will try to explain a little.
<u><center>GOING CONCERN</center></u>
Going concern means that an organization will work in future so it maintains accounts keeping in mind "going concern". Fixed assets and longterm liabilities are simplest example.
<b>I remember that in one of ACCA 1.1 exam there was a question that if a company is going to be desolved, what will be its effect on Fixed Assets.
It means that "going concern" is no more there so Fixed Assets will become Current Assets.</b>
<u><center>PREDENCE CONCEPT</center></u>
It meanse being carefull in situation of uncertainity. Recording inventory at lower of cost and NRV is the best example. If PC were ingored, inventory would be recorded at cost.
<u><center>CONSISTENCY</center></u>
It is also a simple one. Unless you are forced to do so, don't change the way you are treating a transaction such as depreciation method. If you are following straight line method, keep following it unless you have a geniun reason to change it that may be legal restriction, better presentation etc.
<u><center>Materiality</center></u>
Materiality effects the presentation of Financial statements. An item is material if it can influance the decision of user. You can judge materiality through the nature and size of an item. A material item should/must be shown in the F/S.
<u><center>REVENUE RECOGNITION</center></u>
There are conditions on when to rec. a revenue for which you have to consult a book but for know keep in mind that revenue is recognized when it is 100% "certain".
<u><center>GOING CONCERN</center></u>
Going concern means that an organization will work in future so it maintains accounts keeping in mind "going concern". Fixed assets and longterm liabilities are simplest example.
<b>I remember that in one of ACCA 1.1 exam there was a question that if a company is going to be desolved, what will be its effect on Fixed Assets.
It means that "going concern" is no more there so Fixed Assets will become Current Assets.</b>
<u><center>PREDENCE CONCEPT</center></u>
It meanse being carefull in situation of uncertainity. Recording inventory at lower of cost and NRV is the best example. If PC were ingored, inventory would be recorded at cost.
<u><center>CONSISTENCY</center></u>
It is also a simple one. Unless you are forced to do so, don't change the way you are treating a transaction such as depreciation method. If you are following straight line method, keep following it unless you have a geniun reason to change it that may be legal restriction, better presentation etc.
<u><center>Materiality</center></u>
Materiality effects the presentation of Financial statements. An item is material if it can influance the decision of user. You can judge materiality through the nature and size of an item. A material item should/must be shown in the F/S.
<u><center>REVENUE RECOGNITION</center></u>
There are conditions on when to rec. a revenue for which you have to consult a book but for know keep in mind that revenue is recognized when it is 100% "certain".
