FAC 1502 UNIT 1 BASIC PRINCIPLES OF ACCOUNTING EXAM REVIEW SOLVED QUESTIONS
COMPLETE ANSWERS GRADED A PLUS
Question:
● Full Disclosure Principle
Answer:
Financial statements contain all information necessary to understand a business' financial condition.
Question:
● Business Entity Principle
Answer:
Financial information is recorded and reported separately from the owner's personal financial
information. Accounts are kept for entities and not the people who own or run the company.
Question:
● Consistent Reporting Principle
Answer:
The same accounting procedures must be followed in the same way in each accounting period. Once
an entity decides on one method of reporting (i.e. a method of calculating depreciation), it must use
that same method for subsequent events.
Question:
● Going Concern Assumption Principle
Answer:
Financial statements are prepared with the expectation that a business will remain in operation
indefinitely.
COMPLETE ANSWERS GRADED A PLUS
Question:
● Full Disclosure Principle
Answer:
Financial statements contain all information necessary to understand a business' financial condition.
Question:
● Business Entity Principle
Answer:
Financial information is recorded and reported separately from the owner's personal financial
information. Accounts are kept for entities and not the people who own or run the company.
Question:
● Consistent Reporting Principle
Answer:
The same accounting procedures must be followed in the same way in each accounting period. Once
an entity decides on one method of reporting (i.e. a method of calculating depreciation), it must use
that same method for subsequent events.
Question:
● Going Concern Assumption Principle
Answer:
Financial statements are prepared with the expectation that a business will remain in operation
indefinitely.
