Accounting Principles Volume 1 Preparation
Guide Journal Entries Financial Exam
Questions and Answers Verified Solutions
Latest Update 2026/2027
Question:
GAAP (generally accepted accounting principles).
Answer:
Financial accounting is governed by concepts & rules.
1. Relevant info affects decision of user
2. Reliable info trusted by users
3. Comparable info aids in contrasting organizations
Question:
SEC- Securities and Exchange Commission.
Answer:
Federal agency congress has charged to set reporting rules for org that sell ownership shares to
public
Question:
FASB (Financial Accounting Standards Board).
Answer:
Independent group of full-time members responsible for setting accounting rules
Question:
IASB (international accounting standards board).
Answer:
Group that identifies preferred accounting practices & encourages global acceptance; issues IFRS
,Question:
Measurement/cost principle.
Answer:
Accounting info based on actual cost.
-if cash is given for a service, cost is measured by cash paid
-if other is exchanged (car traded for truck), cost is measured as cash value of what is given up or
received
This ensure reliability, verifiability
Question:
Revenue Recognition Principle.
Answer:
Recognition = recording
-happens when goods or services are provided to customers
-is recorded at the amount received
Question:
Expense Recognition Principle.
Answer:
A company records the expenses it incurred to generate revenue reported
Question:
Full disclosure principle.
Answer:
A company must report the details behind financial statements that would impact users' decision.
Often found in footnotes
Question:
Going Concern Assumption.
, Answer:
Accounting info reflects a presumption that the business will continue operation instead of being
closed or sold.
-implies business/property is reported at cost instead of, say, liquidation value that insists closure
Question:
Monetary Unit Assumption.
Answer:
We can express transactions & events in monetary units. Money being the common denominator in
business
Question:
Time Period Assumption.
Answer:
Presumes that the life of a company can be divided into time periods, months/years, & useful
reports can be prepared for those periods
Question:
Business entity assumption.
Answer:
a business is accounted for separately from other business entities, including its owner.
Question:
Materiality constraint.
Answer:
Only information that influences decisions (through importance/dollar amt) need be disclosed
Question:
Cost-benefit constraint.
Guide Journal Entries Financial Exam
Questions and Answers Verified Solutions
Latest Update 2026/2027
Question:
GAAP (generally accepted accounting principles).
Answer:
Financial accounting is governed by concepts & rules.
1. Relevant info affects decision of user
2. Reliable info trusted by users
3. Comparable info aids in contrasting organizations
Question:
SEC- Securities and Exchange Commission.
Answer:
Federal agency congress has charged to set reporting rules for org that sell ownership shares to
public
Question:
FASB (Financial Accounting Standards Board).
Answer:
Independent group of full-time members responsible for setting accounting rules
Question:
IASB (international accounting standards board).
Answer:
Group that identifies preferred accounting practices & encourages global acceptance; issues IFRS
,Question:
Measurement/cost principle.
Answer:
Accounting info based on actual cost.
-if cash is given for a service, cost is measured by cash paid
-if other is exchanged (car traded for truck), cost is measured as cash value of what is given up or
received
This ensure reliability, verifiability
Question:
Revenue Recognition Principle.
Answer:
Recognition = recording
-happens when goods or services are provided to customers
-is recorded at the amount received
Question:
Expense Recognition Principle.
Answer:
A company records the expenses it incurred to generate revenue reported
Question:
Full disclosure principle.
Answer:
A company must report the details behind financial statements that would impact users' decision.
Often found in footnotes
Question:
Going Concern Assumption.
, Answer:
Accounting info reflects a presumption that the business will continue operation instead of being
closed or sold.
-implies business/property is reported at cost instead of, say, liquidation value that insists closure
Question:
Monetary Unit Assumption.
Answer:
We can express transactions & events in monetary units. Money being the common denominator in
business
Question:
Time Period Assumption.
Answer:
Presumes that the life of a company can be divided into time periods, months/years, & useful
reports can be prepared for those periods
Question:
Business entity assumption.
Answer:
a business is accounted for separately from other business entities, including its owner.
Question:
Materiality constraint.
Answer:
Only information that influences decisions (through importance/dollar amt) need be disclosed
Question:
Cost-benefit constraint.
