Associate Degree in Accounting and Finance (ADAF) - Imperial College of Business Studies

Question 1

Which accounting concept dictates that expenses should be recognized in the period in which they help generate revenue?

Accepted Answer

Matching Principle

Answer

Going Concern Concept

Answer

Consistency Concept

Answer

Prudence Concept

Question 2

If a company purchases equipment for cash, what is the effect on the accounting equation?

Accepted Answer

Increase in assets, decrease in assets

Answer

Increase in assets, increase in liabilities

Answer

Decrease in assets, decrease in equity

Answer

No change in total assets

Question 3

Which principle requires that the same accounting methods be applied from one period to the next to allow for comparability?

Accepted Answer

Consistency Principle

Answer

Going Concern Principle

Answer

Objectivity Principle

Answer

Materiality Principle

Question 4

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

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 fiscal year

Question 5

What does a credit entry increase in the accounting system?

Accepted Answer

Liabilities and Equity

Answer

Assets and Expenses

Answer

Assets and Liabilities

Answer

Expenses and Equity

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