41-50

Question 1

True or False: Accounting information must always be both reliable and relevant.

Answer 1

FALSE ; Firms sacrifice reliability for relevancy

Question 2

Other Comprehensive Income Account

Answer 2

Includes all changes in a company’s assets that are not included on its income statement

Question 3

Matching Principle

Answer 3

All expenses should be matched in the same period with the revenue they helped generate

Question 4

Accounting Entity

Answer 4

All economic entities can be accounted for

Question 5

Going Concern Concept

Answer 5

Assumption that companies will last forever (Accounting information is reported in regular periods)

Question 6

Measurement Unit

Answer 6

Accounting Information always records the amount of currency exchanged in each transaction

Question 7

Full Disclosure

Answer 7

Companies should disclose circumstances that make a considerable difference to financial statement users

Question 8

Materiality

Answer 8

The quality of being relevant to reported numbers

Question 9

Conservatism

Answer 9

Always undervalue profits and assets in uncertain situations

Question 10

Trend Analysis

Answer 10

Tracking financial performance for a company