Financial Accounting
Accounting Principles And Concepts
Section 1
Which accounting principle requires that expenses be recognized in the same period as the revenue they helped to generate?
a) Cost Principle
b) Matching Principle
c) Fair Presentation Principle
d) Accrual Concept
Answer: b
Submitted by: Amar
Which accounting principle requires that assets be recorded at their cost of acquisition, rather than at their current market value?
a) Cost Principle
b) Fair Presentation Principle
c) Going Concern Principle
d) Monetary Unit Principle
Answer: a
Submitted by: Amar
Which accounting principle requires that the financial statements present a true and fair view of the company’s financial position?
a) Cost Principle
b) Fair Presentation Principle
c) Going Concern Principle
d) Monetary Unit Principle
Answer: b
Submitted by: Enaam
Which accounting concept requires that transactions be recorded in the accounting records as soon as they occur, rather than when the payment is received or made?
a) Accrual Concept
b) Fair Value Concept
c) Full Disclosure Principle
d) Consistency Principle
Answer: a
Submitted by: Ilyas
Which accounting principle requires that the financial statements be prepared on the assumption that the company will continue to operate in the foreseeable future?
a) Going Concern Principle
b) Fair Value Concept
c) Full Disclosure Principle
d) Consistency Principle
Answer: a
Submitted by: Ilyas
Which accounting principle requires that the financial statements be prepared using a single currency, and that the exchange rates used be disclosed?
a) Cost Principle
b) Fair Presentation Principle
c) Monetary Unit Principle
d) Full Disclosure Principle
Answer: c
Submitted by: Ilyas
Which accounting principle requires that the financial statements be prepared using the same accounting methods and procedures from one period to the next?
a) Going Concern Principle
b) Fair Value Concept
c) Full Disclosure Principle
d) Consistency Principle
Answer: d
Submitted by: Ilyas
Which accounting principle requires that expenses and revenues be matched and reported in the same period?
a) Cost Principle
b) Matching Principle
c) Fair Presentation Principle
d) Accrual Concept
Answer: b
Submitted by: Aakash
Which accounting concept requires that assets and liabilities be reported at their expected selling or settlement price?
a) Fair Value Concept
b) Full Disclosure Principle
c) Consistency Principle
d) Going Concern Principle
Answer: a
Submitted by: Anwar
Which accounting principle requires that all financial transactions be recorded in the accounting records, regardless of their size or significance?
a) Cost Principle
b) Fair Presentation Principle
c) Full Disclosure Principle
d) Consistency Principle
Answer: c
Submitted by: Ilyas
Which of the following is not a basic accounting principle?
a. Matching principle
b. Cost principle
c. Consistency principle
d. Reporting principle
Answer: d
Which of the following is an example of a current asset?
a. Land
b. Building
c. Inventory
d. Patent
Answer: c
Which of the following is a source document used in accounting?
a. Financial statement
b. Balance sheet
c. Invoice
d. Ledger
Answer: c
Which of the following is a characteristic of a contra account?
a. It increases the balance of the related account
b. It decreases the balance of the related account
c. It has no effect on the balance of the related account
d. It is not related to any other account
Answer: b
Which of the following is a limitation of the cost principle?
a. It does not account for inflation
b. It does not account for changes in market value
c. It does not account for intangible assets
d. It does not account for liabilities
Answer: b
Which of the following is an example of a contra asset account?
a. Accumulated depreciation
b. Unearned revenue
c. Prepaid expense
d. Accounts payable
Answer: a
Which of the following is a characteristic of a debit entry in a journal entry?
a. It represents an increase in an asset account
b. It represents an increase in a liability account
c. It represents a decrease in an expense account
d. It represents a decrease in a revenue account
Answer: a
Which of the following is a component of the accounting equation?
a. Assets = Liabilities – Equity
b. Assets + Liabilities = Equity
c. Assets = Liabilities + Equity
d. Assets – Liabilities = Equity
Answer: c
Which of the following is an example of an accrued expense?
a. Rent paid in advance
b. Salaries paid in arrears
c. Insurance paid in advance
d. Taxes paid in arrears
Answer: b
Which of the following is an example of a prepaid expense?
a. Rent paid in advance
b. Salaries paid in arrears
c. Insurance paid in advance
d. Taxes paid in arrears
Answer: c
