Theory base of Accounting

What is the objective of Accounting?

• To make up a few tables and hope they balance
• To find out how much you need pay other companies.
• To provide useful information for the decision making of users.
• To get Food Friday

How are the users of accounting information classified?

• External users and Internal users
• Inside users and Outside users
• Mr. Meyer and Mrs. Kunasegaran
• Creditors and Debtors

Which assumption states that a business will continue to operate into the future?

• Accounting Entity Assumption
• Going Concern Assumption
• Historical Cost Assumption
• Monetary Assumption

Which Assumption refers to the recording of items at their original purchase price?

• Accounting period assumption
• Accounting entity assumption
• Monetary assumption
• Historical cost assumption

Which type of accounting adheres to the matching principle?

• Cash accounting
• Accrual accounting
• Neither Cash or Accrual accounting
• Both Cash and Accrual accounting

A firm sells goods for P 55, 000 on 25th March 2005 and the payment is not received until 10th April 2005, the amount is due and payable to the firm on the date of sale i.e. 25th March 2005.

• Periodicity Principle
• Consistency
• Accrual Principle
• Adequate Disclosure Principle

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.

• Historical Principle
• Business Entity
• Accrual Principle
• Adequate Disclosure Principle

Which principle/guideline requires the company's financial statements to have footnotes containing information that is important to users of the financial statements?

• Historical Principle
• Business Entity
• Accrual Principle
• Adequate disclosure Principle

The personal assets of the owner of a company will not appear on the company's balance sheet because of which principle/guideline?

• Historical Principle
• Business Entity
• Accrual Principle
• Adequate disclosure Principle

All properties and services acquired by the business must be recorded at their original acquisition cost. This principle pertains to..

• Historical Principle
• Business Entity
• Accrual Principle
• Objectivity principle