Name:

Grade and Section:

1. The personal assets of the owner of a company b. Materiality

will not appear on the company's balance sheet c. Monetary Unit
because of which principle/guideline? 9. Which principle/guideline directs a company to
a. Cost show all the expenses related to its revenues of a
b. Economic Entity specified period even if the expenses were not paid
c. Monetary Unit in that period?
2. Which principle/guideline requires a company's a. Cost
balance sheet to report its land at the amount the b. Matching
company paid to acquire the land, even if the land c. Monetary Unit
could be sold today at a significantly higher 10. When the accountant has to choose between
amount? two acceptable alternatives, the accountant should
a. Cost select the alternative that will report less profit,
b. Economic Entity less asset amount, or a greater liability amount.
c. Monetary Unit This is based upon which principle/guideline?
3. Which principle/guideline allows a company to a. Conservatism
ignore the change in the purchasing power of the b. Cost
dollar over time? c. Materiality
a. Cost 11. Public utilities' balance sheets list the plant
b. Economic Entity assets before the current assets. This is acceptable
c. Monetary Unit under which accounting principle/guideline?
4. Which principle/guideline requires the a. Conservatism
company's financial statements to have footnotes b. Cost
containing information that is important to users of c. Industry Practices
the financial statements? 12. A large company purchases a $250 digital
a. Conservatism camera and expenses it immediately instead of
b. Economic Entity recording it as an asset and depreciating it over its
c. Full Disclosure useful life. This practice may be acceptable
5. Which principle/guideline justifies a company because of which principle/guideline?
violating an accounting principle because the a. Cost
amounts are immaterial? b. Matching
a. Conservatism c. Materiality
b. Full Disclosure
c. Materiality 13. A corporation pays its annual property tax bill
6. Which principle/guideline is associated with the of approximately $12,000 in one payment each
assumption that the company will continue on long December 28. During the year, the corporation's
enough to carry out its objectives and monthly income statements report Property Tax
commitments? Expense of $1,000. This is an example of which
a. Economic Entity accounting principle/guideline?
b. Going Concern a. Conservatism
c. Time Period b. Matching
7. A very large corporation's financial statements c. Monetary Unit
have the dollar amounts rounded to the nearest 14. A company sold merchandise of $8,000 to a
$1,000. Which accounting principle/guideline customer in December. The company's sales terms
justifies not reporting the amounts to the penny? require the customer to pay the company in 30
a. Full Disclosure days. The company's income statement reported
b. Materiality the sale in December. This is proper under which
c. Monetary Unit accounting principle/guideline?
8. a. Full Disclosure
Accountants might recognize losses but not b. Monetary Unit
gains in certain situations. For example, the c. Revenue Recognition
company might write-down the cost of 15. Accrual accounting is based on this
inventory, but will not write-up the cost of principle/guideline.
inventory. Which principle/guideline is a. Cost
associated with this action? b. Full Disclosure
a. Conservatism c. Matching
Answer:
1. Economic Entity
2. Cost
3. Monetary Unit
4. Full Disclosure
5. Materiality
6. Going Concern
7. Materiality
8. Conservatism
9. Matching
10. Conservatism
11. Industry Practice
12. Matching
13. Matching
14. Revenue Recognition
15. Matching