Accounting Principles exam questions
with verified solutions 2023
Is the rationale for why plant assets are not reported at liquidation value. (Dont use the cost
principle) - answer Going Concern assumption
Indicates that personal and business record-keeping should be separately maintained - answer
Economic Entity Assumption
Ensures that all relevant financial information is reported - answer Full disclosure principle
Assumes that the dollar is the "measuring stick" used to report on financial performance -
answer Monetary unit assumption
Requires that accounting standards be followed for all significant items - answer Materiality
constraint
Separates financial information into time periods for reporting purposes - answer Periodicity
assumption
Requires recognition of expenses in the same period as related revenues - answer Expense
recognition principle
Indicates that fair value changes subsequent to purchase are not recorded in the accounts -
answer Cost principle
Ability to easily evaluate one company's results relative to another's - answer Comparability
with verified solutions 2023
Is the rationale for why plant assets are not reported at liquidation value. (Dont use the cost
principle) - answer Going Concern assumption
Indicates that personal and business record-keeping should be separately maintained - answer
Economic Entity Assumption
Ensures that all relevant financial information is reported - answer Full disclosure principle
Assumes that the dollar is the "measuring stick" used to report on financial performance -
answer Monetary unit assumption
Requires that accounting standards be followed for all significant items - answer Materiality
constraint
Separates financial information into time periods for reporting purposes - answer Periodicity
assumption
Requires recognition of expenses in the same period as related revenues - answer Expense
recognition principle
Indicates that fair value changes subsequent to purchase are not recorded in the accounts -
answer Cost principle
Ability to easily evaluate one company's results relative to another's - answer Comparability
