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Accounting Concepts

Accounting Concepts

15 Questions
1. The accounting period of a business is separated into activitiess that help the business keep
its accounting records in an orderly fashion.
A Accounting Period Cycle B Source Document
C Fiscal Year D None of the Above
2. Jeff's Construction, LLC bought a piece of equipment in 2001 for P 10,000. Today this piece
of equipment is only worth P 2,000. Jeff would still report the equipment at its purchase
price of P 10,000, less depreciation, even though its current fair market value is only P 2,000.
A Historical Principle B Business Entity
C Accrual Principle D Adequate Disclosure Principle
3. Which principle/guideline requires the company's financial statements to have footnotes
containing information that is important to users of the financial statements?
A Historical Principle B Business Entity
C Accrual Principle D Adequate disclosure Principle
4. Concept: Financial information is reported for a specific period of time on financial
statements.
A Matching Expenses with Revenue B Accounting Period Cycle
C Business Entity
5. Concept: a business's records should never be mixed with an owner's personal records and
reports
A adequate disclosure B business entity
C objective evidence D going concern 6. Concept: When a source document is prepared for each transaction
A going concern B materiality
C realization of revenue D objective evidence
7. Concept: When a business activity is large enough to impact business decisions, it should be
recorded clearly in the financial statements
A realization of revenue B materiality
C unit of measurement D consistent reporting
8. Concept: Financial statements are prepared with the expectation that business will remain
in operation indefinately
A going concern B materiality
C accounting period cycle D matching revenue with expenses
9. Concept: The same accounting procedures must be followed in the same way each
accounting period
A accounting period cycle B objective evidence
C consistent reporting D materiality
10. Concept: Revenue is recorded at the same time goods or services are sold.
A realization of revenue B the revenue principle
C going concern D historical cost
11. Concept: The revenue from business activities and the expenses associated with earning
that revenue are recorded in the same accounting period
A adequate disclosure B unit of measurement
C historical cost D matching expenses with revenue
12. Concept: Business transactions are reported in numbers that have common values.
Meaning all reporting should be done in terms of money
A Unit of measurement B historical cost
C materiality D matching expenses with revenue 13. Concept: The actual amount paid for merchandise or other items purchased is recorded,
even though the value of the asset may be different
unit of measurement historical cost
A B
matching expenses with revenue consistent reporting
C D
14. When preparing Financial Statements which monetary measurement basis states that the
accounting records should be based on the original cost of the transaction.
A Current Value B Replacement Value
C Realisation Value D Historical Cost
15. The Matching Concept states that revenue should only be recognised when it is earned and
not received. If a company sells goods on credit in March and receives payment in May, this
would be shown in the sales figure for?
A The month the goods were sold. B The month the goods were produced.
The month the cash is creceived from the None of the above.
C D
customer. Answer Key
1.a 2.a 3.d 4.b
5.b 6.d 7.b 8.a
9.c 10.a 11.d 12.a
13.b 14.d 15.a"