E2-7 GRADE A FULLY ANSWERED QUESTION
AND ANSWER
Fair value changes are not recognized in the accounting records. - (correct
answer)historical cost principle
Financial information is presented so that investors will not be misled. - (correct
answer)full disclosure principle
Intangible assets are capitalized and amortized over periods benefited. - (correct
answer)expense recognition principle
Repair tools are expensed when purchased. - (correct answer)materiality
Agricultural companies use fair value for purposes of valuing crops. - (correct
answer)industry practices & fair value principle
Each enterprise is kept as a unit distinct from its owner or owners. - (correct
answer)economic entity assumption
All significant post balance sheet events are reported. - (correct answer)full disclosure
principle
Revenue is recorded at point of sale. - (correct answer)revenue recognition principle
All important aspects of bond indentures are presented in financial statements. -
(correct answer)full disclosure principle
Rationale for accrual accounting. - (correct answer)revenue principle & expense
recognition
AND ANSWER
Fair value changes are not recognized in the accounting records. - (correct
answer)historical cost principle
Financial information is presented so that investors will not be misled. - (correct
answer)full disclosure principle
Intangible assets are capitalized and amortized over periods benefited. - (correct
answer)expense recognition principle
Repair tools are expensed when purchased. - (correct answer)materiality
Agricultural companies use fair value for purposes of valuing crops. - (correct
answer)industry practices & fair value principle
Each enterprise is kept as a unit distinct from its owner or owners. - (correct
answer)economic entity assumption
All significant post balance sheet events are reported. - (correct answer)full disclosure
principle
Revenue is recorded at point of sale. - (correct answer)revenue recognition principle
All important aspects of bond indentures are presented in financial statements. -
(correct answer)full disclosure principle
Rationale for accrual accounting. - (correct answer)revenue principle & expense
recognition
