BASIC ACCOUNTING CONCEPTS

The accounting principle that states companies and owners should be account for separately:

• Economic Entity Concept

• Going Concern Concept

• Monetary Unit Measurement Concept

• Accounting Period Concept

Assets are recorded at their original purchase price according to the:

• Materiality Principle

• Historical Cost Principle

• Cost Benefit Principle

• Consistency Principle

When estimating unearned revenues, what principle applies?

• Revenue Recognition Principle

• Historical Cost Principle

• Full Disclosure Principle

• Consistency Principle

Switching accounting principles every year would violate the:

• Conservatism Principle

• Historical Cost Principle

• Full Disclosure Principle

• Consistency Principle

The owner invests personal cash in the business. Assets will.......

• Increase

• Decrease

• No effect

The owner withdraws cash from the business for personal use. Owner's Equity will...........

• Increase

• Decrease

• No Effect

The company receives cash from a bank loan. Liabilities will.........

• Increase

• Decrease

• No Effect

In May, Company X records the transaction by a debit to Accounts Receivable for RM5,000 and a credit to Service Revenues for RM5,000. What is the effect of this entry upon the accounting equation for Company X?

• Assets Increase; Liabilities Decrease

• Assets Increase; Owner's Equity Increase

• Assets Decrease; Owner's Equity Increase

In June, Company X receives the RM5,000 from Accounts Receivable. What is the effect on the accounting equation and which accounts are affected at Company X?

• Assets Increase; Owner's Equity Decrease

• No Effect

• Assets Increase; Liabilities Decrease

Business transactions are reported in numbers that have common values. Meaning all reporting should be done in terms of money

• Monetary measurement

• Historical cost

• Materiality

• Going concern