Accounting Concept

The historical cost principle requires that when assets are acquired, they be recorded at

• appraisal value.

• cost.

• market price.

• book value.

GAAP stands for

• Generally Accepted Auditing Procedures.

• Generally Accepted Accounting Principles.

• Generally Accepted Auditing Principles.

• Generally Accepted Accounting Procedures

If services are rendered for credit, then

• assets will decrease.

• liabilities will increase.

• owner's equity will increase.

• liabilities will decrease.

Assets are recorded at their original purchase price according to the:

• Materiality Principle

• Historical Cost Principle

• Cost Benefit Principle

• Consistency Principle

Profit is determined by subtracting income from expenses.

• True

• False

The equation(s) below represent(s) how the equity in a business is determined:

• Equity =

  Assets – Liabilities

• Assets =

  Equity + Liabilities

• Liabilities =

  Assets – Equity

• All of the above

• None of the above

______ is the net worth of a business.

Which of the following is an example of a non-current asset?

• Cash in the bank

• Employees

• Customer that owes our business money

• Office computer

A current asset is a resource with a life span that is usually longer than a year.

• True

• False

An _____ is defined as a present economic resource controlled by the entity as a result of past events.