FAC 1502 UNIT 1 BASIC PRINCIPLES OF ACCOUNTING ACTUAL EXAM TEST PAPER FULL

FAC 1502 UNIT 1 BASIC PRINCIPLES OF ACCOUNTING ACTUAL EXAM TEST PAPER FULL
QUESTIONS CORRECT RESPONSES




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.