1. Write the meaning of GAAP.
Ans:-GAPP is a common set of accounting principles, standards and procedures for reporting financial information, as established by the International Financial Accounting Standards Board.
2. What do you understand by ‘Business entity’ concept?
Ans:-According to this concept, the business organization and the owner of the business are two different entities. So, business transactions are recorded in the books of account of business organization and not in the books of account of its owner. By this concept, a business has nothing
to do with the personal transactions of its owners. For example, rent paid for the business is recorded in the books of business but rent paid by owner for his personal use is not recorded in business book.
3. Write in brief about money measurement concept.
Ans:-According to this concept, only the monetary transactions of the business are recorded in the books of account. Those transaction, which cannot be expressed in monetary value are not recorded in the books of account. For example the events like accident of the manager, conflict between management and employees, Strike by the employees etc. are not recorded in books since they have no monetary value.
4. Write about the going concern concept.
Ans:-Accounting to this concept a business is considered as a going concern. It means the business is will continue to operate for a long Period of time. The transactions of the business, therefore are also recorded on the assumption it is a continuing enterprise. Assuming this concept the business firm classifies the transactions into cash and credit. The purchase and sale of fixed assets are also differentiated from the purchase and sale of trading goods. The classification of capital and revenue items, concepts of outstanding expenses, prepaid expenses, accrued income etc. are the examples of going concern concept.
5. Write in brief about cost concept.
Ans:-Accounting to this concept the cost of goods and services are recognized when they are incurred and recorded at their costs. Similarly, the fixed assets are recorded in thy books of account at the cost price at which they are purchased rather than their market price. This practice contributes to true accounting records and presents a concern from giving arbitrary value.
6. Give the meaning of accounting period concept.
Ans:-Every business man wants to know the profit or loss and financial position of their business at the end of a certain period. Although, accounting is going on process, but books of account are closed at the end of a certain period and that period is known as accounting period. Accounting period is generally for one year. In Nepal, accounting period starts from 1st Shrawan and ends on 31st Ashadh every year. At the end if accounting period, income statement and the balance sheet are prepared.