Ethics of Accounting

Question 1

What are the 4 general principles of accounting

Answer 1

1. Cost principle 2. Revenue principle 3. Expense recognition 4. Full disclosure

Question 2

what is the expense recognition principle

Answer 2

a company recognizes and records the expenses it incurs to generate its revenue. an example is the cost to rent an office soc

Question 3

What is the full disclosure principle

Answer 3

a company reports the details behind financial statements to inform its external users

Question 4

what are the three parts of the fraud triangle

Answer 4

Objective, Rationalization or attitude that what they are committing is not criminal in nature , and Pressure to commit fraud.

Question 5

what are the 4 accounting assumptions

Answer 5

1. a business will continue to operate (going) principle 2. time period 3. monetary unit 4. businesses entity

Question 6

what is the main difference between a corporation and a limited liability company

Answer 6

LLC has no additional business income tax

Question 7

What is the FASB

Answer 7

a national nonprofit entity that sets standards and principles for accounting. Establishes GAAP

Question 8

what is the cost-benefit constraint

Answer 8

The benefits of information an entity discloses must outweigh the costs to the user.

Question 9

who examines and determines whether financial statements are prepared using GAAP

Answer 9

an audit

Question 10

what is the revenue recognition principle

Answer 10

that revenue should be recorded when it is earned, not when cash is received. an example is that a pre-payment would be counted as a liability not a revenue

Question 11

a recognition principle that requires expenses to be recorded in the same accounting period as the revenue that is recognized as a result fo those expenses

Answer 11

matching principle