Essay Questions 126.Financial statementsA set of financial statements includes three related accounting reports, or statements. In the space provided, list the names of three primary statements, and...

Essay Questions

126.Financial statements


A set of financial statements includes three related accounting reports, or statements. In the space provided, list the names of three primary statements, and give a brief description of the accounting information contained in each.

127.Development of generally accepted accounting principles


(A.) What is meant by the phrase "generally accepted accounting principles"?
(B.) Explain the concept of the business entity and how it relates to generally accepted accounting principles.

(A.) Generally accepted accounting principles are the concepts, standards, or rules used in the preparation of financial statements.
(B.) Generally accepted accounting principles require that financial statements describe the activities of a specific economic entity, which is an economic unit that engages in identifiable business activities.