LESSON 1_ACCOUNTING CONCEPTS AND PRINCIPLES - (REVIEW)

According to this concept, revenues, and expenses exhibiting cause-and-effect relationships should be recognized in the same accounting period.

• Matching Principle

• Accrual Basis of Accounting

• Cash Basis of Accounting

• Time Period Assumption

Also known as CONSERVATISM

• Use of Judgment and Estimates

• Accounting Entity Assumption

• Matching Principle

• Prudence

This assumption states that a business is an entity separate and distinct from its owners.

• Separate Legal Existence

• Going Concern Assumption

• Accounting Entity Assumption

• Time Period Assumption

Which of the following is NOT an accounting assumption?

• Going Concern

• Time Period

• Matching Principle

• Accounting Entity

This assumption allows accountants to defer the recognition of expenses into the future.

• Going Concern Assumption

• Time Period Assumption

• Accounting Entity Assumption

• Substance Over Form Assumption

Which of the following can be considered a fiscal year?

• January 1 - December 31

• February 1 - January 31

• March 1 - December 31

• October 1 - May 31

Jinky, the accountant of XYZ company, recorded sales of P2 000 000 for the month of October. Related to this sale are the salaries of factory employees worth P250 000 and bonuses amounting to 3% (P60 000) of the total sales.

What amount of expense should Jinky record?

• P250 000

• P60 000

• P 190 000

• P310 000

Following the principle of PRUDENCE, in case of doubt

• Record Assets and Do not record any Liabilities

• Record all Expenses and Income

• Record Expenses and Do not record Income

• Record Income and Do not record Expenses

Which of the following principles/assumptions of accounting helps in making the financial statements more accurate?

• Matching Principle

• Accrual Accounting

• Time Period Assumption

• A and B only

Which of the following items in a company's accounting records require the use of an estimate?

• Cash

• Accounts Payable

• Warranty Expense

• Salary Expense