1.3 Explain the key accounting principles and the conceptual framework
1) Accounting is important because the process “keeps score” of the financial aspects of a business.
2) The definition of the economic entity concept includes the requirement that personal assets must be combined with business assets.
3) Financial statements are historical reports of what has taken place financially in a business.
4) International Financial Reporting Standards (IFRS) are used in every country in the world.
5) Financial statements can help the managers of a business in making decisions regarding the business.
6) Market value and historical cost (value) are the same concept.
7) Accountants need to exercise professional judgment.
8) The main role of accounting is to compile reports to determine the profit made by a company over a period of time.
9) The goal of IFRS is to create a global set of accounting standards.
10) IFRS and ASPE are interchangeable.