Principles of Accounting Volume 1: Financial Accounting

Mitchell Franklin, Patty Graybeal, Dixon Cooper

Chapter 3

Analyzing and Recording Transactions - all with Video Answers

Educators

Section 1

Describe Principles, Assumptions, and Concepts of Accounting and Their Relationship to Financial Statements

Problem 1

That a business may only report activities on financial statements that are specifically related to
company operations, not those activities that affect the owner personally, is known as which of the following?
A. separate entity concept
B. monetary measurement concept
C. going concern assumption
D. time period assumption

Puneet P.

Puneet P.

Numerade Educator

Problem 2

That companies can present useful information in shorter time periods such as years, quarters, or
months is known as which of the following?
A. separate entity concept
B. monetary measurement concept
C. going concern assumption
D. time period assumption

Puneet P.

Numerade Educator

Problem 3

The system of using a monetary unit, such as the US dollar, to value the transaction is known as
which of the following?
A. separate entity concept
B. monetary measurement concept
C. going concern assumption
D. time period assumption

Puneet P.

Numerade Educator

Problem 4

Which of the following terms is used when assuming a business will continue to operate in the
foreseeable future?
A. separate entity concept
B. monetary measurement concept
C. going concern assumption
D. time period assumption

Puneet P.

Numerade Educator

Problem 5

The independent, nonprofit organization that sets financial accounting and reporting standards for
both public- and private-sector businesses that use generally accepted accounting principles (GAAP) in the United States is which of the following?
A. Financial Accounting Standards Board (FASB)
B. generally accepted accounting principles (GAAP)
C. Securities and Exchange Commission (SEC)
D. conceptual framework

Puneet P.

Numerade Educator

Problem 6

The standards, procedures, and principles companies must follow when preparing their financial
statements are known as which of the following?
A. Financial Accounting Standards Board (FASB)
B. generally accepted accounting principles (GAAP)
C. Securities and Exchange Commission (SEC)
D. conceptual framework

Puneet P.

Numerade Educator

Problem 7

These are used by the FASB, and it is a set of concepts that guide financial reporting.
A. Financial Accounting Standards Board (FASB)
B. generally accepted accounting principles (GAAP)
C. Securities and Exchange Commission (SEC)
D. conceptual framework

Puneet P.

Numerade Educator

Problem 8

This is the independent federal agency protecting the interests of investors, regulating stock markets,
and ensuring companies adhere to GAAP requirements.
A. Financial Accounting Standards Board (FASB)
B. generally accepted accounting principles (GAAP)
C. Securities and Exchange Commission (SEC)
D. conceptual framework

Puneet P.

Numerade Educator

Problem 9

Which of the following is the principle that a company must recognize revenue in the period in which
it is earned; it is not considered earned until a product or service has been provided?
A. revenue recognition principle
B. expense recognition (matching) principle
C. cost principle
D. full disclosure principle

Puneet P.

Numerade Educator

Problem 10

Which of the following is the principle that a business must report any business activities that could
affect what is reported on the financial statements?
A. revenue recognition principle
B. expense recognition (matching) principle
C. cost principle
D. full disclosure principle

Puneet P.

Numerade Educator

Problem 11

Also known as the historical cost principle, ________ states that everything the company owns or
controls (assets) must be recorded at their value at the date of acquisition.
A. revenue recognition principle
B. expense recognition (matching) principle
C. cost principle
D. full disclosure principle

Puneet P.

Numerade Educator

Problem 12

Which of the following principles matches expenses with associated revenues in the period in which
the revenues were generated?
A. revenue recognition principle
B. expense recognition (matching) principle
C. cost principle
D. full disclosure principle

Puneet P.

Numerade Educator