ACCT 229 TAMU FINAL VOCAB

What is the primary focus of the 'Understandability' characteristic in accounting?

• Information should be comparable between companies

• Information should be presented in a timely manner

• Information should be comprehensible to those willing to understand it

• Information should be free from error

Which qualitative characteristic ensures that information makes a difference in decision making?

• Timeliness

• Verifiability

• Relevance

• Faithful Representation

What does the 'Materiality' concept in accounting refer to?

• The size of the transaction/error affects its recording

• Information should be presented in a timely manner

• Information should be neutral and free from error

• Information should be comparable between companies

Which principle assumes that a company will continue to operate into the foreseeable future?

• Economic Entity

• Going-Concern

• Time Period Assumption

• Monetary Unit

What does the 'Monetary Unit' assumption imply?

• All information will be measured in its monetary currency

• Business transactions are separate from personal transactions

• The company will continue to operate indefinitely

• The long life of a company can be reported over shorter periods

Which principle states that assets should be recorded at their original cost?

• Revenue Recognition Principle

• Cost Principle

• Conservatism Principle

• Expense Recognition Principle

What is the main focus of the 'Conservatism Principle' in accounting?

• To match expenses with revenues

• To never overstate assets or understate liabilities

• To understate assets and overstate liabilities

• To overstate assets and liabilities

When should revenues be recorded according to the Revenue Recognition Principle?

• When cash is received

• When the earning process is complete

• When expenses are incurred

• When goods are ordered

What does the Expense Recognition Principle (Matching Concept) require?

• Expenses should be recorded when they are incurred

• Expenses should be recorded when goods are delivered

• Expenses should be matched with revenues in the same period

• Expenses should be recorded when cash is paid

Which inventory method updates COGS with every sale?

• LIFO

• FIFO

• Perpetual Inventory

• Periodic Inventory