Accounting Principles Questions With Verified Answers | UPDATED

Accounting Principles Questions With Verified Answers | UPDATED The consistency principle - ANSWER states that, once you adopt an accounting principle or method, continue to follow it consistently in future accounting periods. The full disclosure principle - ANSWER states that you should include in an entity's financial statements all information that would affect a reader's understanding of those statements. The materiality principle - ANSWER states that you are allowed to ignore an accounting standard if the net impact of doing so has such a small impact on the financial statements that a reader of the financial statements would not be misled. The reliability principle - ANSWER is the concept of only recording those transactions in the accounting system that you can verify are reliable with objective evidence. The time period principle - ANSWER is the concept that a business should report the financial results of its activities over a standard time period, which is usually monthly, quarterly, or annually. The conservatism principle - ANSWER is the general concept of recognizing expenses and liabilities as soon as possible when there is uncertainty about the outcome, but to only recognize revenues and assets when they are assured of being received. The economic entity principle - ANSWER states that the recorded activities of a business entity will be kept separate from the recorded activities of its owner(s) and any other business entities. The going concern principle - ANSWER is the assumption that an entity will remain in business for the foreseeable future. Conversely, this means the entity will not be forced to halt operations and liquidate its assets in the near term at what may be very low fire-sale prices. The monetary unit principle - ANSWER states that you only record business transactions that can be expressed in terms of a currency. Thus, a company cannot record such non-quantifiable items as employee skill levels, the quality of customer service, or the ingenuity of the engineering staff.