FAC1502 - Financial Accounting Principles, Concept - Papers MCQS with Correct Answers - A+ Grade

Financial Accounting Principles
Multiple choice Questions (MCQs)
with Correct Answers


Question 1:
Which accounting principle states that expenses should be recognized in the same
period as the revenues to which they relate?


A) Matching Principle
B) Revenue Recognition Principle
C) Cost Principle
D) Going Concern Principle


Correct Answer: A) Matching Principle


Question 2:
Under the accrual basis of accounting, when is revenue recognized?


A) When cash is received
B) When the product is delivered or the service is performed
C) When an invoice is sent
D) When the customer places an order


Correct Answer: B) When the product is delivered or the service is performed


Question 3:
Which accounting concept assumes that a business will continue to operate
indefinitely?

,A) Consistency Concept
B) Going Concern Concept
C) Materiality Concept
D) Conservatism Concept


Correct Answer: B) Going Concern Concept


Question 4:
According to the cost principle, assets are recorded on the balance sheet at:


A) Historical Cost
B) Current Market Value
C) Estimated Future Value
D) Original Purchase Price


Correct Answer: A) Historical Cost


Question 5:
Which accounting principle states that accounting information should be verifiable
and independent parties can reach the same conclusion?


A) Reliability Principle
B) Relevance Principle
C) Comparability Principle
D) Consistency Principle


Correct Answer: A) Reliability Principle


Question 6:
What is the primary purpose of the trial balance?

,A) To verify the accuracy of the financial statements
B) To determine the net income of a company
C) To calculate depreciation expense
D) To record adjusting entries


Correct Answer: A) To verify the accuracy of the financial statements


Question 7:
Which financial statement represents a "snapshot" of a company's financial position
at a specific point in time?


A) Income Statement
B) Statement of Cash Flows
C) Balance Sheet
D) Statement of Retained Earnings


Correct Answer: C) Balance Sheet


Question 8:
When a company recognizes revenue before receiving cash, it results in:


A) An increase in accounts receivable and revenue
B) A decrease in accounts receivable and revenue
C) An increase in accounts payable and revenue
D) A decrease in accounts payable and revenue


Correct Answer: A) An increase in accounts receivable and revenue


Question 9:

, Which accounting principle requires that expenses and liabilities should be recorded
as soon as possible, but revenue and assets should only be recorded when it is
certain they will be received?


A) Consistency Principle
B) Materiality Principle
C) Conservatism Principle
D) Revenue Recognition Principle


Correct Answer: C) Conservatism Principle


Question 10:
When a company makes a sale on credit, how does it affect the accounting
equation?


A) Assets increase; Liabilities increase
B) Assets increase; Equity increases
C) Assets decrease; Liabilities increase
D) Assets decrease; Equity decreases


Correct Answer: A) Assets increase; Liabilities increase


Question 11:
Which financial statement shows the changes in equity over a specific period of
time?


A) Income Statement
B) Statement of Cash Flows
C) Statement of Changes in Equity
D) Balance Sheet


Correct Answer: C) Statement of Changes in Equity