Basic accounting principles, concepts and postulates - One Line Questions
1.
According to the Dual Aspect Concept, every transaction has: —
Two equal and opposite effects
2.
The concept of 'prudence' in accounting is synonymous with: —
Conservatism
3.
Which accounting postulate assumes that a business will continue to operate indefinitely? —
Going Concern Postulate
4.
The accounting concept that states that only transactions that can be measured in terms of money should be recorded is: —
Money Measurement Concept
5.
The accounting postulate that assumes that a business will continue to operate for the foreseeable future is the: —
Going Concern Postulate
6.
The principle of matching revenues with expenses is fundamental to which accounting basis? —
Accrual Basis
7.
If a company consistently uses the same accounting methods, it adheres to the principle of: —
Consistency
8.
Which concept implies that items of insignificant value can be treated in the most convenient way? —
Materiality
9.
The principle that requires that accounting procedures should be followed consistently year after year is: —
Consistency
10.
Which concept is violated if a company changes its inventory valuation method every year without proper justification? —
Consistency
11.
Which concept ensures that accounting methods and policies are applied uniformly from one period to the next? —
Consistency Principle
12.
The concept that states that accounting policies should be applied consistently from one period to the next is: —
Consistency Principle
13.
The accounting concept that ensures comparability of financial statements across different entities is: —
Comparability
14.
Which accounting concept is violated if a company changes its depreciation method every year? —
Consistency Principle
15.
The concept that states that an item is material if its omission or misstatement could influence the decision of users of financial statements is: —
Materiality Concept
16.
Which accounting concept states that a business is a separate entity from its owners? —
Business Entity Concept
17.
The concept that states that a business is separate and distinct from its owners is the: —
Business Entity Concept
18.
The accounting postulate that a business has a life of its own, distinct from its owners, is the: —
Business Entity Concept
19.
The principle that revenues should be recognized when earned and expenses when incurred, regardless of when cash is exchanged, is known as: —
Accrual Basis of Accounting
20.
The principle of 'substance over form' in accounting means that: —
Economic substance of a transaction should be reflected.
21.
The principle that states 'anticipate no profit but provide for all possible losses' is: —
Conservatism Principle
22.
The accounting postulate that revenue should be recognized only when it is earned and realized or realizable is the: —
Revenue Recognition Principle
23.
The accounting principle that requires that all assets be recorded at the amount paid to acquire them is the: —
Historical Cost Principle
24.
The accounting concept that requires that revenues and gains should not be anticipated, but losses and expenses should be recognized as soon as they are probable, is: —
Conservatism Principle
25.
Which concept states that revenue should be recognized when earned, regardless of cash receipt? —
Revenue Recognition Principle
26.
Which accounting concept implies that if two methods are available, the one that results in lower profit or asset value should be chosen? —
Conservatism Principle
27.
The concept that revenue should be recognized only when it is earned and realized or realizable is the: —
Revenue Recognition Principle
28.
The accounting principle that requires that all business transactions should be recorded at their original cost is the: —
Historical Cost Principle
29.
The principle that states 'anticipate no profit but make provision for all possible losses' is known as: —
Conservatism Principle
30.
The concept that all significant information should be disclosed in the financial statements is known as: —
Full Disclosure Principle
31.
The accounting principle that financial statements should present all information necessary for users to make informed decisions is the: —
Full Disclosure Principle
32.
The principle that requires that all transactions and events that have a material impact on the financial statements should be disclosed is: —
Full Disclosure Principle
33.
The accounting concept that requires that all transactions and events should be recorded at their original cost is: —
Historical Cost Principle
34.
Which concept ensures that the financial statements reflect the economic substance of transactions rather than just their legal form? —
Substance Over Form Principle
35.
What does the Money Measurement Concept imply? —
Only monetary transactions are recorded.
36.
Which concept dictates that accounting information should be verifiable and free from bias? —
Reliability
37.
The concept that financial statements should be presented in a way that users can understand is: —
Understandability
38.
Which concept implies that accounting information should be provided to decision-makers before it loses its capacity to influence their decisions? —
Timeliness
39.
The principle that states that accounting information should be neutral and free from bias is related to: —
Reliability
40.
The accounting postulate that transactions and events should be recorded in a way that can be independently verified is: —
Reliability
41.
The concept that requires a business to report its financial position and performance in a manner that is understandable to users is: —
Understandability
42.
The concept that financial statements should be comparable over time and with other entities is related to: —
Comparability
43.
Which accounting concept states that accounting information should be free from material error and bias? —
Reliability
44.
Which accounting postulate ensures that financial statements are based on objective evidence rather than subjective opinion? —
Objectivity
45.
The accounting postulate that requires financial statements to be relevant to the economic decisions of users is: —
Relevance
46.
The Dual Aspect Concept is the foundation of which accounting equation? —
Assets = Liabilities + Equity
47.
Which principle requires that expenses incurred to generate revenue should be recognized in the same period as the revenue? —
Matching Principle
48.
The principle that requires that expenses should be charged against revenue of the period in which they are incurred is the: —
Matching Principle
49.
The accrual basis of accounting recognizes expenses: —
When they are incurred, regardless of when cash is paid.
50.
When a company uses the accrual basis of accounting, it recognizes revenue: —
When the service is performed or goods are delivered.