Question
bookkeeping price process or upert and financial institutions, and accounting firms around the world.Private enterprises (PE) in Canada are permitted to follow either IFRS or square Dasol of less onerous GAAP-based standards developed by the ACSEC DThe ACSB is the body that governs accounting standards in Canada Accounting practices are guided by GAAP which are comprised of qualitative characteristics and principles. As already staled, relevance and faithful representation are the primary qualitative characteristics square c understandability o Dand square Ore additional qualitative characteristics Dand square Dare the principles that support these qualitative characteristics square full disclosure verifiability inflationary unit immateriality going concern laws monetary unit GAAS business unit timeliness recognition variability ACSB cost consistency Business entity gone concern irrelevant
Solution
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(249 Votes)
Saige
Master ยท Tutor for 5 years
Answer
Let's break down the bookkeeping concepts and fill in the blanks.**1. Private Enterprise Accounting Standards in Canada:**Private enterprises (PE) in Canada are permitted to follow either IFRS or **ASPE (Accounting Standards for Private Enterprises)**. ASPE is a less onerous set of GAAP-based standards developed by the AcSB.**2. The Governing Body:**The **AcSB (Accounting Standards Board)** is the body that governs accounting standards in Canada. It's important not to confuse this with the **AICPA (American Institute of Certified Public Accountants)** which governs in the US.**3. Qualitative Characteristics of Accounting Information:**Relevance and faithful representation are the primary qualitative characteristics. The additional qualitative characteristics that enhance these are:* **Comparability:** Allows users to identify similarities and differences between different sets of financial information.* **Verifiability:** Means different knowledgeable and independent observers could reach consensus that a particular depiction is faithfully represented.* **Timeliness:** Having information available to decision-makers in time to be capable of influencing their decisions.* **Understandability:** Classifying, characterizing, and presenting information clearly and concisely.**4. Accounting Principles:**Several principles support the qualitative characteristics. The ones listed that fit are:* **Monetary Unit:** Assumes that money is the common denominator of economic activity and provides an appropriate basis for accounting measurement and analysis.* **Going Concern:** Assumes that the business will continue in operation for the foreseeable future. This allows the company to defer certain expenses to future periods.* **Business Entity:** The business is a separate entity from its owners and other stakeholders. This means the business's transactions are separate from the owner's personal transactions.* **Cost:** Assets are recorded at their historical cost (the amount paid to acquire them).* **Full Disclosure:** All relevant information that could reasonably be expected to influence users' decisions should be included in the financial statements.* **Consistency:** The same accounting policies and methods should be used from period to period within a company to ensure comparability.The following terms from your list *don't* fit in the blanks:* **Inflationary Unit:** While inflation is a concern, it's not a core accounting principle in the same way the others listed are.* **Immateriality:** This relates to the size of a transaction and whether its omission or misstatement would influence decisions. It's a consideration, but not a core principle.* **Laws:** While businesses must follow laws, this is a broader concept than accounting principles.* **GAAS (Generally Accepted Auditing Standards):** These are standards for auditors, not accounting principles.* **Business Unit:** This refers to a segment of a company, not a core accounting principle.* **Recognition:** This is the process of recording transactions, not a principle itself.* **Variability:** This isn't a standard accounting term.* **ACSB:** This is the standard-setting body, not a principle.* **Gone Concern:** This is a misspelling of "Going Concern."* **Irrelevant:** The opposite of a key qualitative characteristic.