Accounting Online Program Accounting Principles 2

Question 1

Which accounting principle requires that expenses be recorded in the same period as the revenues they helped generate?

Accepted Answer

Matching principle

Answer

The matching principle dictates that expenses must be recognized in the same period as the related revenues.

Question 2

A company uses the same depreciation method year after year. Which principle does this demonstrate?

Accepted Answer

Consistency principle

Answer

The consistency principle requires companies to apply the same accounting methods across periods for comparability.

Question 3

Under the going concern assumption, assets are typically recorded at:

Accepted Answer

Historical cost

Answer

Because the business is assumed to continue operating, assets are recorded at historical cost rather than forced-sale values.

Question 4

Which of the following is an example of applying the materiality principle?

Accepted Answer

Expensing a $200 printer immediately rather than depreciating it

Answer

Materiality allows immaterial items to be expensed immediately because the effort of capitalizing them would not affect users' decisions.

Question 5

The principle that financial statements should include all information necessary for users to make informed decisions is called:

Accepted Answer

Full disclosure principle

Answer

The full disclosure principle requires that any information significant enough to influence decisions be included in financial statements or notes.

Accounting Online Program Practice Test