Financial Accounting Branches and Principles Quiz

The Going Concern Concept assumes that the business will continue to operate for a long period. It affects the way fixed assets are recorded at their original cost and how depreciation is charged on these assets. Additionally, it influences the ability of the business to enter into long-term contracts with outside parties.

The Business Entity Concept in financial accounting treats the business as separate and distinct from its owners. This concept requires a separate set of books to be prepared for the business, and the proprietor is treated as a creditor of the business. Different books are prepared for other businesses of the proprietor.

The Money Measurement Concept dictates that only transactions of monetary nature are recorded, while transactions of qualitative nature, even if important to the business, are not considered. This concept helps maintain consistency and objectivity in financial reporting.

Responsibility Accounting is an emerging branch of accounting that focuses on the identification, measurement, and reporting of the responsibilities of individual managers. It helps in evaluating the performance of managers and their impact on the organization's financial results.

The Accounting Period Concept involves dividing the entire life of a business into smaller, distinct time periods for the purpose of preparing periodic financial statements. This concept allows for the assessment of the business's performance and financial position over specific intervals.