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Fundamentals of Accounting 7 Running Head: Fundamentals of Accounting

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Added on  2020-05-16

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Fundamentals Of Accounting 7 Running Head: Fundamentals of Accounting Fundamental of Accounting Question 1 3 Question 2 4 Question 3 4 Question 4 5 Question 5 6 References: 7 Question 1 The five major underlying assumptions of accounting are: Business Entity: This concept explains that each business has a separate existence from its business and the entity is treated as an artificial judicial person distinct from its members. Money Measurement: The money measurement concept says that the accounting of the entity is to be done in a common currency as this will

Fundamentals of Accounting 7 Running Head: Fundamentals of Accounting

   Added on 2020-05-16

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Running Head: Fundamentals of AccountingFundamental of Accounting
Fundamentals of Accounting 7 Running Head: Fundamentals of Accounting_1
Fundamentals Of Accounting2Table of ContentsQuestion 1.............................................................................................................................................3Question 2.............................................................................................................................................4Question 3.............................................................................................................................................4Question 4.............................................................................................................................................5Question 5.............................................................................................................................................6References:............................................................................................................................................7
Fundamentals of Accounting 7 Running Head: Fundamentals of Accounting_2
Fundamentals Of Accounting3Question 1The five major underlying assumptions of accounting are:1.Business Entity:This concept explains that each business has a separate existence from its business and the entity is treated as an artificial judicial person distinct from its members. The effect of this assumption on the accounting of the company is that all the legal and contractual obligations are on the name of the company or entity and not on the name of the any individual member. 2.Going Concern (Continuity): This assumption states that the business is not affected by its members as members may come and go the entity will not be affected. The effect of this assumption is on the accounting of the entity as accounting is done on the basis of the assumption that business will continue for long time and all the assets and liabilities are recorded accordingly. 3.Periodicity:This assumption says that the life of the entity can be divided into months and years depending on the accounting criterion and the contention of the accountants of the entity. Usually the term for the finalisation of accounts is to be taken as one year and quarterly and half yearly accounting can be done as per the requirements of the law (Tinkelman, 2015).4.Money Measurement:The money measurement concept says that the accounting of the entity is to be done in a common currency as this will make the financial statements comparable and the stakeholders and investors of the company can easily evaluate the financial statements. This is because entities are involved in the export and import transactions so they need to record all the transaction in the currency of the domicile of the entity.5.Stable Dollar:The stability dollar assumption states that the dollar is accepted as a stable unit of measurement. This accounting assumption states that the accounts need not to make any changes in the accounts and financial statements of the entity because of the
Fundamentals of Accounting 7 Running Head: Fundamentals of Accounting_3

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