Associate Degree in Accounting and Finance (ADAF) - Virtual University

Question 1

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

Accepted Answer

Matching Principle

Answer

Consistency Principle

Answer

Cost Principle

Answer

Revenue Recognition Principle

Question 2

When a company pays cash for insurance in advance, which account is debited?

Accepted Answer

Prepaid Insurance

Answer

Insurance Expense

Answer

Cash

Answer

Accounts Payable

Question 3

Which accounting principle requires that financial statements be prepared under the assumption that the business will continue to operate indefinitely?

Accepted Answer

Going Concern Concept

Answer

Monetary Unit Assumption

Answer

Business Entity Concept

Answer

Periodicity Assumption

Question 4

Which principle states that financial statements should provide all information necessary for an external user to understand the entity's financial position?

Accepted Answer

Full Disclosure Principle

Answer

Consistency Principle

Answer

Materiality Principle

Answer

Conservatism Principle

Question 5

When a company records an asset at its original purchase price regardless of current market fluctuations, which principle is being applied?

Accepted Answer

Historical Cost Principle

Answer

Fair Value Principle

Answer

Revenue Recognition Principle

Answer

Matching Principle

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