1-6 Objective Demos Flashcards
Identify one of the four accounting principles that matches the example.
“A balance sheet includes a consolidated amount for property, plant, and equipment while a note to the financial statements includes the categories and amounts of property, plant, and equipment, the balance of accumulated depreciation, the depreciation method employed, and average useful lives.”
Full Disclosure Principle
Identify one of the four accounting principles that matches the example.
“A purchase of land 15 years ago is recorded in the financial statements at its original acquisition cost, which is verified with the supporting documents from the date of purchase.”
Measurement (Historical Cost)
Identify one of the four accounting principles that matches the example.
“When a seller delivers a product in fulfillment of a promise in a revenue contract, the seller recognizes expense (cost of goods sold) for sacrifice of the product sold to the customer. The expense is directly related to the revenue.”
Expense Recognition Principle
Identify one of the four accounting principles that matches the example.
“A company receives a cash deposit from a customer for a service to be performed in three months. Even though cash is received now, revenue is not recognized until the performance obligation is satisfied in three months.”
Revenue Recognition Principle
Identify one of the four accounting principles that matches the example.
“The cost of utilities for the month of June for a company is expensed in that month because the benefits from incurring utilities cost are derived in that same month.”
Expense Recognition Principle
Identify one of the four accounting principles that matches the example.
“An investment in common stock of another company is adjusted to its quoted price based on the closing stock price on a public exchange. The fair value is considered to be a Level 1 classification in the fair value heirachy because the market price is observable.”
Measurement Principle (Fair Value)
Identify one of the four accounting principles that matches the example.
“A company elects to present a supplementary schedule on the detail of general and administration expenses, the total of which is shown in the income statement.”
Full Disclosure Principle
Identify one of the four accounting principles that matches the example.
“A company performs a service in the current month but will not receive payment for 90 days. Because the company satisfied the performance obligation in the current period, the company records revenue in the current period even though payment will be received in the future.”
Revenue Recognition Principle
Identify one of the four accounting principles that matches the example.
“An upfront full payment for a 12-month casualty insurance policy is allocated evenly as expense over the 12-month period that the company receives the benefit from having insurance coverage.”
Expense Recognition Principle
