Wall Street Prep Accounting Questions And Correct Answers

AA,P,C: Accounting Entity - Answer-The assumption that a corporation is an entity
separate from any person

/.AA,P,C: Conservatism - Answer-The constraint that assets are usually understated
and liabilities are not understated, for example historical cost measurements

/.AA,P,C: Consistency - Answer-The constraint that recording methods and
assumptions may not always be the same over time

/.AA,P,C: Disclosure - Answer-The principle that a corporation must reveal all relevant
financial information

/.AA,P,C: Estimates and Judgement - Answer-The constraint that estimates/predictions
cannot always be accurate

/.AA,P,C: Going Concern - Answer-The Assumption that a corporation will continue to
exist for the foreseeable future

/.AA,P,C: Historical Cost - Answer-The principle that resources and liabilities are
recorded at their initial cost rather than a continuously updating value

/.AA,P,C: Matching - Answer-The principle that costs must be recorded in the same
period that revenues were generated

/.AA,P,C: Materiality - Answer-The constraint that one transaction may be deemed
relevant for one company but not another, usually based on size

/.AA,P,C: Measurement & Units - Answer-The principle that financial statements can
only show the quantifiable assets or liabilities of a corporation

/.AA,P,C: Periodicity - Answer-the principle that financial statements reflect a standard
period of time, usually years or quarters

/.AA,P,C: Revenue Recognition - Answer-The principle that revenues are recorded
when EARNED and MEASURABLE

/.Accounts Payable - Answer-liability that represents obligations for unpaid bills on
goods or services