FAC1502 UNIT 1 BASIC Principles OF Accounting TEST Questions and Answers Verified Solutions Latest Update

FAC1502 UNIT 1 BASIC Principles
OF Accounting TEST Questions and
Answers Verified Solutions Latest
Update


Question:

Booking/Book Keeping

Answer:
The recording of economic events.


Question:

Identification

Answer:
Analyzing the economic events relevant to a business.


Question:

Recording

Answer:
Recording economic events in a systematic, chronological, diary of events. Measured in
dollars and cents.


Question:

Communication

Answer:
Relaying information or accounting reports to interested users.

, Question:

Internal Users

Answer:
Users of financial information within a company/organization. Examples: -
Finances-Marketing-Management-Human Resources


Question:

External Users

Answer:
Users off financial information that are outside of the company/organization. Examples:
- Investors-Creditors


Question:

GAAP

Answer:
Generally Accepted Accounting Principles


Question:

Cost Principle (Historical Cost Principle)

Answer:
Dictates that companies record assets at their cost at the time the assets were
purchased. Example: - "best buy purchases land at $360000, but by the end of the year
the value goes up to $400000. Best buy still declares it $360000 under the HCP.


Question:

Fair Value Principle

Answer:
Indicates that assets and liabilities should be reported at fair value, fair value being the
price received to sell an asset or a liability. *only in situations where assets are actively
traded is the FVP principle applicable* Example: -assets actively being traded so value
can change flexibly.