Accounting Principles Flashcards
7 cards from real Accounting Online Program practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Accounting Principles flashcards as text
Which accounting principle requires that expenses be recorded in the same period as the revenues they helped generate?
Answer: Matching principle
The matching principle dictates that expenses must be recognized in the same period as the related revenues.
A company uses the same depreciation method year after year. Which principle does this demonstrate?
Answer: Consistency principle
The consistency principle requires companies to apply the same accounting methods across periods for comparability.
Under the going concern assumption, assets are typically recorded at:
Answer: Historical cost
Because the business is assumed to continue operating, assets are recorded at historical cost rather than forced-sale values.
Which of the following is an example of applying the materiality principle?
Answer: Expensing a $200 printer immediately rather than depreciating it
Materiality allows immaterial items to be expensed immediately because the effort of capitalizing them would not affect users' decisions.
The principle that financial statements should include all information necessary for users to make informed decisions is called:
Answer: Full disclosure principle
The full disclosure principle requires that any information significant enough to influence decisions be included in financial statements or notes.
A business records revenue when it is earned, not when cash is collected. This reflects which accounting basis?
Answer: Accrual basis accounting
Accrual basis accounting recognizes revenue when earned and expenses when incurred, regardless of cash flow timing.
Which principle states that a business should record assets at the price paid to acquire them?
Answer: Historical cost principle
The historical cost principle requires assets to be recorded at their original purchase price, providing objectivity and verifiability.