Quiz 3 - Business 9

Which accounting standard states that:

The indefinite life of a company can be divided into periods of equal length for the preparation of financial reports.

• Prudence

• Time Period Assumption

• Accrual Accounting

• Accounting Entity Assumption

Which accounting standard states that:

Income and assets are not overstated and liabilities and expenses are not

overstated.

• Prudence

• Time Period Assumption

• Accrual Accounting

• Accounting Entity Assumption

Which accounting standard states that:

The business is separate from the owners, managers, and employees operating the business.

• Prudence

• Time Period Assumption

• Accrual Accounting

• Accounting Entity Assumption

Which accounting standard states that:

Approximations made by accountants or the management in the preparation of financial statements.

• Use of Judgement and Estimates

• Time Period Assumption

• Going Concern Assumption

• Accounting Entity Assumption

Which accounting standard states that:

It is assumed that the operations of a business will continue indefinitely into the future.

• Use of Judgement and Estimates

• Time Period Assumption

• Going Concern Assumption

• Accounting Entity Assumption

Based on these situations, match each one to the correct accounting concept and principle.

Mingyu, a car salesman, rendered service for a car company in December. Mingyu was able to sell five cars in December. However, he was paid by the company in January of the next year. His salary will be recorded as an expense of the car company in December.

• Accrual Accounting

• Use of Accounting Judgement and Estimates

• Cash Basis Accounting

• Prudence

• Matching Principle

Based on these situations, match each one to the correct accounting concept and principle.

A company records warranty expense even though it is not entirely sure when warranties will be performed.

• Accrual Accounting

• Use of Accounting Judgement and Estimates

• Cash Basis Accounting

• Prudence

• Matching Principle

Based on these situations, match each one to the correct accounting concept and principle.

Credit sales are recorded by a company as revenues even though no cash is received.

• Accrual Accounting

• Use of Accounting Judgement and Estimates

• Cash Basis Accounting

• Prudence

• Matching Principle

Based on these situations, match each one to the correct accounting concept and principle.

Mr. Joon recorded the sale of a computer set once he received the cash payment from the customer.

• Accrual Accounting

• Use of Accounting Judgement and Estimates

• Cash Basis Accounting

• Prudence

• Matching Principle

Based on these situations, match each one to the correct accounting concept and principle.

MYG does not record any gain but records all losses.

• Accrual Accounting

• Use of Accounting Judgement and Estimates

• Cash Basis Accounting

• Prudence

• Matching Principle