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Study Master Gr12 Accounting GAAP Principles

This revision pack provides support for learners revising key concepts in the Grade 12 Accounting curriculum, including companies, fixed assets, inventories, VAT, manufacturing costs, and budgeting. It summarizes the GAAP principles of accounting, including the entity rule, historical cost concept, going concern concept, matching concept, prudence concept, and materiality concept. Examples are provided to illustrate each principle. The pack also includes summaries of debtors and creditors control accounts and guidance on interpreting financial statements.

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nhloniphointelligence
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312 views2 pages

Study Master Gr12 Accounting GAAP Principles

This revision pack provides support for learners revising key concepts in the Grade 12 Accounting curriculum, including companies, fixed assets, inventories, VAT, manufacturing costs, and budgeting. It summarizes the GAAP principles of accounting, including the entity rule, historical cost concept, going concern concept, matching concept, prudence concept, and materiality concept. Examples are provided to illustrate each principle. The pack also includes summaries of debtors and creditors control accounts and guidance on interpreting financial statements.

Uploaded by

nhloniphointelligence
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Study & Master

Support Pack | Grade 12


CAPS

Accounting
GAAP principles
This revision pack for Accounting Grade 12 provides support for
learners revising the most important concepts and principles covered
in the CAPS curriculum. These include concepts relating to companies,
the acquisition of Fixed assets, inventories, VAT, Manufacturing and cost
accounts, and budgeting. Summaries of the GAAP principles, theory of
Accounting, and the format of Debtors and Creditors control accounts
are provided. Furthermore, a detailed table to summarise the
interpretation of Financial Statements is provided.
You have permission to print or photocopy this document,
and to distribute it electronically via email or WhatsApp.
Cambridge University Press Africa is a proudly South African
publisher – we are providing this material in response to the need
to support teachers and learners during the school shutdown and
for the remainder of the 2020 school year.
For more information on our Study & Master CAPS-approved
textbooks and valuable resource material, visit
www.cambridge.org

We are all in this together!


www.cambridge.org
Revision 2
Companies: GAAP principles

GAAP principles
GAAP principle Description Example
Entity rule The financial affairs of the owners should be The business has its own bank account
kept separate from those of the business – and the owners each have their own bank
they are separate entities. accounts.
Historical cost concept Assets should be entered at its historical cost; Land and buildings purchased for R500 000
this is the amount that was originally paid for will be entered at that amount in the books,
them. even if the business can sell it for a lot more
after a couple of years.
Going concern concept The financial statements of a business are If a business had stationery printed in the
prepared with the assumption that the name of the business to the value of R5 000
business will continue operating in the and it is unused at the end of the financial
foreseeable future. period, it will be shown at that value in
the financial statements as a current asset.
However, if the business is closing down in
the next financial period, this stationery will
have no value.
Matching concept Income and expenses must be accounted for The telephone account for February 2020
in the correct time period (the one in which must be taken into account in the financial
they were incurred). period ending 28 February 2020, even
though the account will only be paid in
March 2020.
Prudence concept When uncertain results are estimated, If the business expects to make a profit of
it is important to ensure that assets and R100 000 on the sale of part of the building,
income are not overstated and liabilities and it will not be entered in the books until the
expenses are not understated. transfer of the land has been concluded.
Concept of materiality Information is material when its omission or While consumable costs may be included
misstatement can influence the economic in the Sundry Expenses account, interest
decisions of users who rely on the financial on overdraft must be shown in a specific
statements. account, as it is material to know the value of
the finance cost on the overdraft.

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