Accounting Ch 1 T/F

 Accounting is the language of business.

• True

• False

 A creditor would favor a positive net worth.

• True

• False

The principles of right and wrong that guide an individual in making personal decisions is called business ethics.

• True

• False

Keeping personal and business records separate is an application of the business entity concept.

• True

• False

Generally Accepted Accounting Principles, GAAP, allows for flexibility in reporting.

• True

• False

Answer explanation

GAAP moved towards standardizing reporting procedures and limit reporting flexibility.

Recording business costs in terms of hours required to complete projects is an application of the unit of measurement concept.

• True

• False

Answer explanation

Recording costs in terms of DOLLARS is an application of Unit of Measurement concept

Assets such as cash and supplies have value because they can be used to acquire other assets or be used to operate a business.

• True

• False

The relationship among assets, liabilities, and owner's equity can be written as an equation.

• True

• False

The accounting equation does not have to be in balance to be correct.

• True

• False

Answer explanation

It DOES need to be in balance.

The accounting concept Realization of Revenue is applied when revenue is recorded at the time goods or services are sold.

• True

• False