Qualitative Characteristics & Accounting Concepts

Companies not disclosing an imminent bankruptcy would violate ______ concept.

• monetary unit concept

• business entity concept

• historical cost concept

• going concern concept

According to _____ concept, assets are recorded at their original purchase price.

• historical cost

• monetary

• going concern

• materiality

Switching accounting principles and methods every year would violate _____ characteristic.

• understandability

• timeliness

• comparability

• verifiability

Each item in financial statements must be able to demonstrate its accuracy of information with evidence. This statement follows ________ characteristic.

• timeliness

• understandability

• comparability

• verifiability

Quality accounting information assists the users to make informed and timely decisions. The enhancing qualitative characteristics include ________.

• Comparability and consistency

• Relevance and faithful representation

• Comparability, verifiability, understandability and timeliness

• Comparability, consistency, verifiability and understandability

Which of the following statements describes a going concern concept?

• A business will ensure that only items that can be expressed in money terms are recorded in the financial statements.

• A business is assumed to operate for an indefinite life.

• All the above

• A business will refrain itself from changing the methods or techniques of valuation to allow comparison of financial statements.

A business has decided to report its financial statement yearly. It just started its business on 1st January 20x1 and will complete the twelve-month reporting period by 31 December 20x1. This is in accordance with the ________________ concept.

• Materiality

• Periodicity

• Consistency

• Neutrality

__________ concept requires business transactions to be recorded and reported separately from the owner’s personal transaction.

• Money measurement concept

• Going concern concept

• Historical cost concept

• Economic entity concept

Financials statements are prepared with the expectation that business will remain in operation indefinitely. This is to comply with the ___________ concept.

• Consistency

• Timeliness

• Going concern

• Historical cost

The practice of recording the actual amount paid for items purchased even though the market value of the item is different, follows ______.

• Money measurement concept

• Historical cost concept

• Business entity concept

• Going concern concept