Associate Degree in Accounting and Finance (ADAF) - Capital University of Science and Technology

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

Revenue Recognition Principle

Answer

Cost Principle

Answer

Going Concern Principle

Question 2

If a company purchases office supplies on credit, which of the following is the correct journal entry?

Accepted Answer

Debit Office Supplies, Credit Accounts Payable

Answer

Debit Office Supplies, Credit Cash

Answer

Debit Accounts Payable, Credit Office Supplies

Answer

Debit Cash, Credit Office Supplies

Question 3

Which accounting principle requires that financial statements be prepared assuming the entity will continue to operate in the foreseeable future?

Accepted Answer

Going Concern Principle

Answer

Historical Cost Principle

Answer

Consistency Principle

Answer

Full Disclosure Principle

Question 4

Which principle suggests that small items that do not significantly impact the decisions of financial statement users can be handled in the most convenient manner?

Accepted Answer

Materiality Principle

Answer

Revenue Recognition Principle

Answer

Objectivity Principle

Answer

Prudence Principle

Question 5

Under the accrual basis of accounting, when should a company recognize revenue?

Accepted Answer

When the performance obligation is satisfied

Answer

When the cash is received from the customer

Answer

When the invoice is printed

Answer

At the end of the fiscal year

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