Which of the given options best describes the truthfulness of the following statements? Statement-1: Generally Accepted Accounting Principles (GAAP) is to be followed by companies so that investors have an optimum level of consistency in the financial statements they use when analyzing companies for investment purposes. Statement-2: Generally Accepted Accounting Principles (GAAP) cover aspects like revenue recognition, balance sheet item classification and outstanding share measurements.
Both statement-1 and statement-2 are correct
The correct answer is option 2. Both statements are correct. Statement-1 is true because GAAP ensures consistency in financial reporting, helping investors to compare financial statements across companies. Statement-2 is also true as GAAP covers key aspects of accounting, including revenue recognition, classification of items on the balance sheet, and share measurement. Therefore, both statements are accurate.
Similar Questions
________ convention underlines the prudence of understating rather than over-stating the net income of an entity for a period and the net assets as on a particular date.
______ convention proposes that while accounting for various transactions, only those which may have significant effect on profitability or financial status of the business should have special consideration for reporting.
Which of the following is regarded as an accounting convention and NOT as an accounting concept?
Consider the following statements in the context of the nature of financial accounting. How many statements are correct?
i) It records only economic events.
ii) It records information as per some specified rules.
iii) It records business transactions only on cash basis.
Which of the following is (are) the attribute(s) of accounting information?
(i) It should help in making inter-firm comparisons but not necessarily inter-period comparisons.
(ii) It should show an accurate and fair view of the profitability of the firm.
(iii) The financial statements should be accompanied by all the source documents while reporting to the stakeholders.
Which of the following is the correct match of the types of accounts and the rules?
(i) For personal accounts — a) Debit the receiver and credit the giver
(ii) For real accounts — b) Debit all expenses and credit all losses
(iii) For nominal accounts — c) Debit what comes in and credit what goes out
In the context of single-entry system, which of the given statement(s) is (are correct)?
(i) It is known as partial and incomplete recording of transactions.
(ii) This system is generally adopted by small traders, petty shop-keepers, doctors, advocates, and other professionals.
(iii) The limited companies cannot adopt it because they have to maintain complete records of all transactions.
______ convention is an exception of the full disclosure concept.
The generally acceptable accounting principles (GAAP) fulfill the conditions of
(i) Relevance
(ii) Objectivity
(iii) Feasibility
A firm purchases a piece of land after making full payment to the seller. However, the legal formalities are yet to be completed. According to which principle does the firm record the transaction in its books of accounts though the legal formalities are NOT completed?
Important Questions from Basic accounting principles
______ is the cost of use of things or services for the purpose of generating revenue.
______ states that accounting report must belong to a common period and use common unit of measurement and format of reporting.
Which of the following accounting concept eliminates personal biasedness and helps in achieving results that are comparable?
Which of the following given statements are CORRECT?
Which of the following statements are FALSE?
