ABM QUIZ

the principle that every business event and transaction must be expressed in terms of a common denominator currency.

• Assumption of Time Period

• Principle of Conservatism

• Assumption of Monetary Measure

This involves expenses being recognized and recorded in the same period as the revenues associated with those expenses (under accrual accounting).

• Principle of Revenue Recognition

• Principle of Cost Recognition

• Principle of Matching of Income and Expenses – MATCHING PRINCIPLE

an accounting assumption that a business will continue its operations for the foreseeable future.

• Assumption of Continuity as a Going Concern

• Accrual Basis

• Assumption of Time Period

recognizes business revenue and matching expenses when they are generated (not when money actually changes hands)

• Matching Priniciple

• Principle of Revenue Recognition

• Accrual Basis

All probable losses are recorded when they are discovered, while gains can only be registered when they are fully realized

• True

• False

It requires that any business expenses incurred must be recorded in the same period as related revenues. (In other words, it formally acknowledges that business must spend money in order to earn revenue).

• Matching Principle

• Accrual Basis

• Principle of Cost Recogniton

The principle requires that businesses recognize revenue when it's earned (accrual accounting) rather than when payment is received (cash accounting).

• Principle of Revenue Recognition

• Matching Principle

• Principle of Cost Recognition

a principle that requires company accounts to be prepared with caution and high degrees of verification.

• Accrual Basis

• Principle of Conservatism

• Assumption of Continuity as a Going Concern

an accounting principle which states that a business should report their financial statements appropriate to a specific time period.

• Assumption of Continuity as a Going Concern

• Assumption of Time Period

• Accrual Basis

What is a statement of cash flow?

• a one-page report showing the difference between total assets and total liabilities, resulting in the overall value of owner's equity.

• Shows the financial position of the company.

• a financial statement that summarizes the amount of cash flowing into and out of a company.