ACCOUNTING PROCESS (W2)

Question 1

Recognize the business as a separate entity

Answer 1

Business entity concept

Question 2

Only includes information on transactions that can be quantified or measured in terms of money

Answer 2

Monetary Unit Concept

Question 3

Assuming that a business entity would continue its operations.

Answer 3

Going Concern Principle

Question 4

Reporting financial transactions over a standards period

Answer 4

Time period Principle

Question 5

Reporting based on solid evidence and avoiding opinionated or biased financial statements

Answer 5

Objectivity

Question 6

Recording acquired assets, liabilities, and equity investments at their original cost

Answer 6

Cost Principle

Question 7

Recording revenue and expenses when incurred rather than when payment is received or made

Answer 7

Accrual Accounting Principle

Question 8

Recognizing revenue when it is realized and earned

Answer 8

Revenue Recognition Principle

Question 9

Reporting revenues and related expenses together in the same period, showing the cause and effect relationship in a transaction

Answer 9

Matching Principle

Question 10

Including all relevant and necessary information that would affect the user’s understanding of the financial statement

Answer 10

Full Disclosure Principle

Question 11

Assets and revenues should not be overstated. Liabilities and expenses should not be understated

Answer 11

Conservatism Principle

Question 12

Business deal with significant information, those considered business critical

Answer 12

Materiality Principle