Question

1.) The basic accounting concept that refers to the tendency of accountants to resolve uncertainty in favor of understating assets and revenues and overstating liabilities and expenses is known as:

the industry practices constraint.

the doctrine of conservatism

the materiality constraint.

2.)

Under Statement of Financial Accounting Concepts No. 8, which of the following is an ingredient of the primary quality of relevance?

		Understandability
		Neutrality
		Materiality
		Verifiability

the substance over form principle.

Answer 1

1) THE CORRECT OPTION IS - the doctrine of conservatism

- it is the basic accounting concept that refers to the tendency of accountants to resolve the factor of uncertainty in favour of any understating assets and revenues or overstating liabilities and expenses

- This conservatism concept keeps system of accounting, more reliable and improve consistency.

2) THE CORRECT OPTION IS - Materiality

- Materiality is a widely accepted accounting concept that concerns about the relevance of information related to financial statements and transactions.

- It states that every material item should be reported in financial statements.

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