POA Theories

2. __________ theory states that accounting treatment chosen should be the one that least overstates assets and profits and least understates liabilities and losses.
5. __________ theory states that the owner and business are separate entities. All transactions are recorded from the point of view of the business.
7. Stage 3 of the accounting cycle
9. __________ theory states that expenses incurred must be matched against income earned in the same period to determine the profit for that period.
11. __________ theory states that the life of a business is divided into regular intervals for the purpose of preparing financial statements.
13. Stage 4 of the accounting cycle
14. __________ theory states that transactions should be recorded at their original cost.
15. __________ theory states that business accounting method must be the same from year to year to ensure meaningful comparison.
16. Stage 1 of the accounting cycle

1. __________ theory states that revenue is earned when goods have been delivered or services have been provided.
3. __________ theory states that all business transactions must be supported by verifiable evidence so that financial statements will be free from biases.
4. __________ theory states that income/expense is only recognized and recorded when it is earned/incurred regardless of whether cash is received/paid.
6. Stage 2 of the accounting cycle
8. __________ theory states that a transaction is considered material if it makes a difference to the decision-making process.
10. __________ theory states that business is assumed to operate forever unless there is credible evidence that it may close down.
12. __________ theory states that only business transactions that can be measured in monetary terms are recorded.