U2, AOS 2 - Lesson 1 - Accounts Payable Flashcards
What does the assumption of separate entity entail in accounting?
A) Business records are combined with the owner’s personal records.
B) Business records are kept separate from the owner’s personal records and other entities.
C) Business and owner records are kept together for simplicity.
D) Business records are only kept separate from other businesses
B
According to the period assumption, why are financial reports prepared for specific periods of time?
A) To ensure the accuracy of records.
B) To compare results over different periods.
C) To predict future performance.
D) To simplify record-keeping.
B
Which assumption recognizes revenues when earned and expenses when incurred?
A) Going concern assumption
B) Period assumption
C) Accrual basis assumption
D) Separate entity assumption
C
What is the primary characteristic of relevance in financial information?
A) It must be accurate and precise.
B) It must be capable of influencing decisions.
C) It must be verified by auditors.
D) It must be easy to understand.
B
What does faithful representation in financial reporting require?
A) Financial information should be relevant and timely.
B) Financial information should be a complete, error-free, and unbiased depiction of real-world events.
C) Financial information should be easily comparable to other entities.
D) Financial information should be simple and concise.
B
Why is verifiability important in financial information?
A) It ensures that the information is easy to understand.
B) It allows different knowledgeable observers to agree that the information faithfully represents events.
C) It makes the information relevant to users.
D) It ensures the information is timely.
B
What does timeliness in financial reporting imply?
A) Financial information must be detailed and comprehensive.
B) Financial information should be available to decision makers before it loses its ability to influence decisions.
C) Financial information must be checked by multiple observers.
D) Financial information should be simple and straightforward.
B
Which qualitative characteristic is concerned with the ability to compare financial information across different entities and periods?
A) Verifiability
B) Timeliness
C) Comparability
D) Relevance
C
Which of the following is not a qualitative characteristic?
A) Relevance
B) Faithful representation
C) Going concern
D) Verifiability
C
Number the steps of the Accounts Payable process:
______ Receive goods
______ Compare invoice to goods received
______ Approve invoice
______ Send purchase order
______ Inspect goods
______ Make payment
______ Receive invoice
______ Compare invoice to PO
2, 6, 7, 1, 3, 8, 4, 5
Who issues a sales invoice?
The company issuing the invoice who has made the sale.
Who issues a purchase invoice?
The company receiving the invoice who has made the purchase.
