Associate Degree in Accounting and Finance (ADAF) - Rashid Latif Khan University

Question 1

Which accounting principle dictates that expenses should be recorded in the same period as the revenues they help generate?

Accepted Answer

Matching Principle

Answer

Going Concern Principle

Answer

Cost Principle

Answer

Consistency Principle

Question 2

If a company buys equipment for $10,000 cash, how does this affect the accounting equation?

Accepted Answer

Assets increase by $10,000, Assets decrease by $10,000

Answer

Assets increase by $10,000, Liabilities increase by $10,000

Answer

Assets decrease by $10,000, Equity decreases by $10,000

Answer

No change to the accounting equation

Question 3

Which accounting principle suggests that financial statements should reflect the economic substance of transactions rather than just their legal form?

Accepted Answer

Substance over form

Answer

Prudence

Answer

Consistency

Answer

Going concern

Question 4

Under the accrual basis of accounting, when should revenue be recognized?

Accepted Answer

When the performance obligation is satisfied

Answer

When cash is received from the customer

Answer

When the order is placed by the customer

Answer

At the end of the accounting year

Question 5

Which principle requires that a company use the same accounting methods period after period to allow for comparability?

Accepted Answer

Consistency

Answer

Materiality

Answer

Full disclosure

Answer

Objectivity

AR Test-preparations exam — 70454413 6f4e 43d8 9115 E0a500e2dde6 MCQs

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