FREE Accounting Principles Question and Answers

Question 1

Which rule/principle mandates that a corporation's land be reported on its balance sheet at the price the firm paid to purchase the land, even if the land might currently be sold for a far higher price?

Accepted Answer

Cost

Answer

Economic Entity

Answer

Monetary Unit

Question 2

Which principle or guideline mandates that the financial statements of the corporation include footnotes conveying data that is crucial to their intended audience?

Accepted Answer

Full Disclosure

Answer

Economic Entity

Answer

Conservatism

Question 3

A business demanded a client pay a $200,000 deposit for work that will start the following year towards the end of the current fiscal year. The corporation listed the $200,000 as a liability on its balance sheet at the end of the current year. Which accounting rule or guideline barred the business from including the $200,000 in its current-year income statement?

Accepted Answer

Revenue Recognition

Answer

Going Concern

Answer

Materiality

Question 4

Which rule or concept permits a business to ignore the evolution of the dollar's purchasing power over time?

Accepted Answer

Monetary Unit

Answer

Economic Entity

Answer

Cost

Question 5

Which principle or rule prevents the owner of a business from listing personal assets on the balance sheet of the business?

Accepted Answer

Economic Entity

Answer

Monetary Unit

Answer

Cost

Question 6

This rule/principle serves as the foundation for accrual accounting.

Accepted Answer

Matching

Answer

Cost

Answer

Full Disclosure

Question 7

Instead of registering a $250 digital camera as an asset and depreciating it over its useful life, a huge firm purchases it and expenditures it right away. Which concept or rule might make this activity acceptable?

Accepted Answer

Materiality

Answer

Matching

Answer

Cost