Accounting Principles and Concepts

Which accounting concept does the comment below refer to?

Assets are normally shown at cost price in the balance sheet, and the cost is the basis for all subsequent accounting for the asset.

• Money Measurement

• Historical Cost

• Matching Principle

• Going Concern

Which accounting assumption does the comment below refer to?

Everything is recorded in terms of money. Items which cannot be recorded in terms of money are ignored and not included. It follows that the financial statements only give a partial picture of the state of a business.

• Money Measurement

• Business Entity

• Matching Principle

• Accounting Period

Which accounting concept does the comment below refer to?

Profit is the difference between revenue and expenses, not cash received and paid. Expenses are matched to revenues, for example, if rent has been set as a percentage of sales (a turnover rent), then the rent is accrued in the accounts is the same period as the sales and not when the rent is actually paid.

• Full Disclosure

• Historical Cost

• Matching Principle

• Revenue Recognition

Which accounting assumption does the comment below refer to?

Accounting assumes the business will continue.

• Business Entity

• Going Concern

• Matching Principle

• Accounting Period

Which accounting assumption does the comment below refer to?

For accounting purposes, the business is treated as a separate entity from the owner. The accounting records show transactions of the business not the owner.

• Going Concern

• Business Entity

• Money Measurement

• Revenue Recognition

Which accounting concept does the comment below refer to?

Profit is earned (realized) at the time the goods or services are passed to the customer and the customer incurs liability for them.

• Dual aspect

• Realization

• Full disclosure

• Going Concern

______________ refers to a 12-month period ending on December 31.

_________________ refers to a 12-month period ending in any month other than December.

The primary private sector agency that oversees external financial reporting standards is the

• Financial Accounting Standards Board

• Federal Bureau of Investigation

• General Accounting Office

• Internal Revenue Service

Which of the following equations properly represents a derivation of the fundamental accounting equation?

• Assets + liabilities = owner's equity

• Assets = owner's equity

• Cash = assets

• Assets – liabilities = owner's equity