Ch. 2-h GRADE A Q&A
All payments less than $25 are expensed as incurred. (Do not use conservatism.) -
(correct answer)Materiality characteristic.
The company employs the same inventory valuation method from period to period. -
(correct answer)Consistency characteristic.
A patent is capitalized and amortized over the periods benefited. - (correct
answer)Expense recognition principle or going concern assumption.
Assuming that dollars today will buy as much as ten years ago. - (correct
answer)Monetary unit assumption.
Rent paid in advance is recorded as prepaid rent. - (correct answer)Expense
recognition principle or going concern assumption.
Financial statements are prepared each year. - (correct answer)Periodicity assumption.
All significant post-balance sheet events are reported. - (correct answer)Full disclosure
principle.
Personal transactions of the proprietor are distinguished from business transactions. -
(correct answer)Economic entity assumption.
Stable-dollar assumption (do not use historical cost principle). - (correct
answer)Monetary unit assumption
The performance obligation is satisfied. - (correct answer)Revenue recognition principle
All payments less than $25 are expensed as incurred. (Do not use conservatism.) -
(correct answer)Materiality characteristic.
The company employs the same inventory valuation method from period to period. -
(correct answer)Consistency characteristic.
A patent is capitalized and amortized over the periods benefited. - (correct
answer)Expense recognition principle or going concern assumption.
Assuming that dollars today will buy as much as ten years ago. - (correct
answer)Monetary unit assumption.
Rent paid in advance is recorded as prepaid rent. - (correct answer)Expense
recognition principle or going concern assumption.
Financial statements are prepared each year. - (correct answer)Periodicity assumption.
All significant post-balance sheet events are reported. - (correct answer)Full disclosure
principle.
Personal transactions of the proprietor are distinguished from business transactions. -
(correct answer)Economic entity assumption.
Stable-dollar assumption (do not use historical cost principle). - (correct
answer)Monetary unit assumption
The performance obligation is satisfied. - (correct answer)Revenue recognition principle
