Facultad de Ciencias Contables y Administrativas

Asignatura: INGLES TECNICO II – 1er Sem. - 5° Curso - 7ª Sección

Recuperacion Clase 24 de Marzo 2020

Task # 1: Look up for the definition of the following concepts.

1. Define Accounting principles.

2. What are the 5 basic accounting principles?

 Revenue Recognition Principle,
 Historical Cost Principle,
 Matching Principle,
 Full Disclosure Principle, and.
 Objectivity Principle.

3. What are the 10 accounting principles?

1. Economic Entity Assumption

2. Monetary Unit Assumption
3. Time Period Assumption
4. Cost Principle
5. Full Disclosure Principle
6. Going Concern Principle
7. Matching Principle
8. Revenue Recognition Principle
9. Materiality
10. Conservatism

4. What is GAAP? Definition

Generally accepted accounting principles (GAAP) refer to a common set of

accounting principles, standards, and procedures issued by the Financial
Accounting Standards Board (FASB)

5. What are the 5 principles of GAAP?

1.) Principle of Regularity
2.) Principle of Consistency
3.) Principle of Sincerity
4.) Principle of Non-Compensation
5.) Principle of Prudence

Task#2:. Explain the following principles in your words, in simple terms.

  Conservatism principle: The conservatism principle is the general concept of
recognizing expenses and liabilities as soon as possible when there is
uncertainty about the outcome, but to only recognize revenues and assets
when they are assured of being received.
 Consistency principle: The consistency principle states that, once you adopt
an accounting principle or method, continue to follow it consistently in future
accounting periods.
 Cost principle: The cost principle is one of the basic underlying guidelines in
accounting. It is also known as the historical cost principle.
 Economic entity principle: The economic entity principle is an accounting
principle that states that a business entity's finances should be keep
separate from those of the owner, partners, shareholders, or related
businesses.
 Full disclosure principle: The full disclosure principle is a concept that
requires a business to report all necessary information about their financial
statements and other relevant information to any persons who are
accustomed to reading this information.
 Going concern principle: The going concern principle is the assumption that
an entity will remain in business for the foreseeable future.
 Matching principle: The matching principle directs a company to report an
expense on its income statement in the period in which the related revenues
are earned.
 Materiality principle: Materiality Principle or materiality concept is the
accounting principle that concern about the relevance of information, and
the size and nature of transactions that report in the financial statements.
 Monetary unit principle: The monetary unit principle states that you only
record business transactions that can be expressed in terms of a currency.
 Reliability principle: The reliability principle is an accounting principle used
as a guideline in determining which financial information should be
presented in the accounts of a business.
 Revenue recognition principle: The accounting guideline requiring that
revenues be shown on the income statement in the period in which they are
earned, not in the period when the cash is collected.
 Time period principle: The time period principle is the concept that a
business should report the financial results of its activities over a standard
time period, which is usually monthly, quarterly, or annually.

KEY TAKEAWAYS

 Accounting standards are implemented to improve the quality of financial

information reported by companies.
 In the United States, the Financial Accounting Standards Board (FASB)
issues Generally Accepted Accounting Principles (GAAP).
 GAAP is required for all publicly traded companies in the U.S.; it is also
routinely implemented by non-publicly traded companies as well.
 Internationally, the International Accounting Standards Board (IASB) issues
International Financial Reporting Standards (IFRS).
 The FASB and IASB sometimes work together to issue joint standards on
hot topic issues, but there is no intention for the U.S. to switch to IFRS in the
forseeable future.