Accounting Principles Quiz

16 multiple-choice questions with answers and explanations · 7 easy, 9 medium

The concepts behind the numbers: going concern, accruals, prudence, materiality, consistency, business entity, the qualitative characteristics of the Conceptual Framework, and professional ethics.

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  1. 1Accounting Principles: The Materiality ConceptA company expenses a $15 stapler immediately instead of depreciating it over its five-year life. This treatment is justified by:easy
  2. 2Accounting Principles: Prudence (Conservatism)"Do not anticipate profits, but provide for all probable losses" is a statement of which accounting concept?easy
  3. 3Accounting Principles: The Money Measurement ConceptUnder the money measurement concept, which of the following is NOT recorded in the accounting records?easy
  4. 4Accounting Principles: The Time Period AssumptionThe time period (periodicity) assumption states that:easy
  5. 5Accounting Principles: Substance Over FormA business uses a machine under an agreement that gives it substantially all the risks and rewards of ownership, although legal title stays with the finance company. Recording the machine as the business’s asset applies:medium
  6. 6Accounting Principles: The Dual Aspect ConceptThe dual aspect concept means that:medium
  7. 7Accounting Principles: Full DisclosureA company facing a major lawsuit explains the case and its possible effect in the notes to its financial statements. Which principle is it applying?medium
  8. 8Accounting Principles: Which Concept Is Breached by Switching Methods?A business changes its inventory valuation method every year, choosing whichever shows the highest profit. Which accounting concept does this breach?medium
  9. 9Accrual Basis — Recognizing Revenue When EarnedA company performs a service in December but is not paid until January. Under accrual-basis accounting, the revenue is recognized in:easy
  10. 10The Matching PrincipleThe matching principle requires that a company recognize an expense:easy
  11. 11Accounting Ethics: A Fundamental Principle of Professional ConductWhich of the following is a fundamental principle of professional ethics for accountants?easy
  12. 12Qualitative Characteristics: The Two Fundamental CharacteristicsAccording to the Conceptual Framework, the two FUNDAMENTAL qualitative characteristics of useful financial information are:medium
  13. 13Qualitative Characteristics: Which Is an Enhancing Characteristic?Which of the following is an ENHANCING qualitative characteristic of financial information?medium
  14. 14Faithful Representation: Which Is Not One of Its Components?To be a faithful representation, information should be complete, neutral and free from error. Which of the following is NOT a component of faithful representation?medium
  15. 15Elements of Financial Statements: The Definition of an AssetWhich of the following best defines an ASSET?medium
  16. 16Accounting Ethics: Being Asked to Delay Recording an ExpenseA manager asks the accountant to move a December expense into January so that the annual profit target — and the manager’s bonus — is met. Complying would breach the principles of:medium

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Accrual Accounting challenges 4

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