Gain and loss recognition principle, Accounting Basics

Assignment Help:

Q. Gain and loss recognition principle?

The gain and loss recognition principle states that we record gains merely when realized but losses when they first become evident. Therefore we recognize losses at an earlier point than gains. This rule is related to the conservatism concept.

Gains normally result from the sale of long-term assets for more than their book value. Firms shouldn't recognize gains until they are realized through sale or exchange. Recognizing potential gains prior to they are actually realized is not allowed.

Losses consume assets as carry out expenses. But unlike expenses they don't produce revenues. Losses are habitually involuntary such as the loss suffered from destruction by fire on an uninsured building. A loss on the sale of a building is possibly voluntary when management make a decision to sell the building even though incurring a loss.


Related Discussions:- Gain and loss recognition principle

What is matching principle, Q. What is matching principle? Expense reco...

Q. What is matching principle? Expense recognition is closely related to as well as sometimes discussed as part of the revenue recognition principle. The matching principle sta

Quote, Hi I need a quote for an assingment. How do I submit it to you?

Hi I need a quote for an assingment. How do I submit it to you?

Costs within the banking industry, There are over 5,000 banks in the United...

There are over 5,000 banks in the United States-more than 10 times the number per person than in other industrialized countries. A recent study suggests that the long-run average c

T Accounts, Provided services on credit to Yamato P/L $5 900. How do we ap...

Provided services on credit to Yamato P/L $5 900. How do we apply this in the t accounts

Journal entry, What are the golden rule of accounting how to pass journal e...

What are the golden rule of accounting how to pass journal entry when strating bussines what

Merchandise lists for $5, stion 8 of 20 5.0 Points Merchandise lists f...

stion 8 of 20 5.0 Points Merchandise lists for $5,000 with a trade discount of 10% and terms of 5/30, 3/60, n/90. If the purchaser is invoiced on April 12th and payment is m

Example of statement of retained earnings, Q. Example of Statement of retai...

Q. Example of Statement of retained earnings? Statement of retained earnings The statement of retained earnings as you remind is a financial statement that summarizes the trans

Adjustments, what will be the journal entry for this: A debit memo from the...

what will be the journal entry for this: A debit memo from the bank was received for bank charges P200.00

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd