Unit 3

1. Accounting principles are the essential guidelines under which ................. prepare their financial statements.

• A. business

  
  

• B. banks

• C. businesses

• D. auditors 

2. These principles guide the methods and decisions for a business over a short and ................. term

.

• A. big

• B. long

• C. small

• D. high 

3. For both internal and ................. reporting purposes, it is important to understand the principles of accounting because they serve as guidelines to the analysis of financial reporting issues.

• A. external

• B. exported

• C. imported  

• D. extra

4. In order to make this language to convey the same meaning to all people, it is necessary that it should be ................. on certain uniform scientifically laid down standards.

• A. base

• B. based

• C. basic

• D. basically 

5. The matching concept does not mean that revenues and ................. for a period are equal.

• A. income

• B. interest

• C. capital

• D. expenses

6. A fair presentation of the results of a firm’s operations during a period of time requires that all expenses incurred in generating that period’s revenues be ................. from the revenues earned.

• A. deducted

• B. conducted

• C. managed

• D. added

7. Pending lawsuits, ................. transactions, or other conditions may have imminent and significant effects on the company's financial status.

 

• A. complete  

• B. completed

• C. incomplete

• D. uncomplete

8. Footnotes supplement financial statements ................. this information and to describe the policies the company uses to record and report business transactions. 

• A. convey

• B. conveyed

• C. conveying

• D. to convey 

9. The financial statement user relies on these concepts and principles related to the accounting period when making ................. and informed decisions about an entity’s financial position and results of operations.

• A. judge

• B. judgments

• C. judgment

• D. judged 

10. Accounting principles are the essential guidelines ................. which businesses prepare their financial statements. 

• A. in

• B. of

• C. under

• D. for