Accounting Basics

Who is credited with devising the accounting principles in the late 1400s?

• Luca Pacioli

• Leonardo da Vinci

• Galileo Galilei

• Nicolaus Copernicus

What are the modern-day accounting principles in the United States called?

• Generally Accepted Accounting Principles

• International Financial Reporting Standards

• Basic Accounting Principles

• Universal Accounting Standards

Which organization has regulatory authority over accounting principles used by public corporations in the US?

• Financial Accounting Standards Board

• Federal Accounting Standards Advisory Board

• US Securities and Exchange Commission

• Internal Revenue Service

Which board is responsible for the development of GAAP?

• Government Accounting Standards Board

• Securities and Exchange Commission

• International Accounting Standards Board

• Financial Accounting Standards Board

What concept assumes that an entity will continue to operate long enough to meet its contractual obligations?

• Entity Concept

• Going Concern Concept

• Reliability Principle

• Time Period Concept

According to which principle must assets and services acquired be recorded at their actual, historical cost?

• Revenue Principle

• Matching Principle

• Cost Principle

• Conservatism

Revenue should only be recorded when it is:

• Earned

• Spent

• Planned

• Estimated

What type of accounting recognizes revenue when cash is received and expenses when cash is paid?

• GAAP Accounting

• Cash-basis Accounting

• Accrual-basis Accounting

• Equity Accounting

What equation is fundamental to the balance sheet?

• Assets + Liabilities = Owner’s Equity

• Assets = Liabilities - Owner’s Equity

• Assets = Liabilities + Owner’s Equity

• Assets - Liabilities = Owner’s Equity

Which of the following is not a typical current asset?

• Supplies

• Inventories

• Buildings

• Cash