Basic accounting principles, concepts and postulates - Question Bank
1. Which concept is violated if a company changes its inventory valuation method every year without proper justification?
2. The principle that states 'anticipate no profit but make provision for all possible losses' is known as:
3. The concept that states that a business is separate and distinct from its owners is the:
4. The accounting principle that requires that all business transactions should be recorded at their original cost is the:
5. The concept that revenue should be recognized only when it is earned and realized or realizable is the:
6. Which accounting postulate ensures that financial statements are based on objective evidence rather than subjective opinion?
7. The concept that states that accounting policies should be applied consistently from one period to the next is:
8. The principle that requires that all transactions and events that have a material impact on the financial statements should be disclosed is:
9. Which accounting concept states that accounting information should be free from material error and bias?
10. The concept that financial statements should be comparable over time and with other entities is related to:
11. The principle that requires that expenses should be charged against revenue of the period in which they are incurred is the:
12. Which accounting concept implies that if two methods are available, the one that results in lower profit or asset value should be chosen?
13. The accounting postulate that assumes that a business will continue to operate for the foreseeable future is the:
14. The accounting concept that states that only transactions that can be measured in terms of money should be recorded is:
15. The principle that requires that accounting procedures should be followed consistently year after year is:
16. Which concept states that revenue should be recognized when earned, regardless of cash receipt?
17. The Dual Aspect Concept is the foundation of which accounting equation?
18. The accounting principle that financial statements should present all information necessary for users to make informed decisions is the:
19. Which concept implies that items of insignificant value can be treated in the most convenient way?
20. The accounting postulate that a business has a life of its own, distinct from its owners, is the:
21. The accrual basis of accounting recognizes expenses:
22. 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:
23. If a company consistently uses the same accounting methods, it adheres to the principle of:
24. The concept that requires a business to report its financial position and performance in a manner that is understandable to users is:
25. The accounting postulate that transactions and events should be recorded in a way that can be independently verified is:
26. Which concept ensures that the financial statements reflect the economic substance of transactions rather than just their legal form?
27. The principle that states that accounting information should be neutral and free from bias is related to:
28. The accounting principle that requires that all assets be recorded at the amount paid to acquire them is the:
29. The concept of 'prudence' in accounting is synonymous with:
30. Which concept implies that accounting information should be provided to decision-makers before it loses its capacity to influence their decisions?
31. The accounting postulate that requires financial statements to be relevant to the economic decisions of users is:
32. When a company uses the accrual basis of accounting, it recognizes revenue:
33. The accounting concept that ensures comparability of financial statements across different entities is:
34. The principle of 'substance over form' in accounting means that:
35. Which accounting concept is violated if a company changes its depreciation method every year?
36. The concept that financial statements should be presented in a way that users can understand is:
37. Which principle requires that expenses incurred to generate revenue should be recognized in the same period as the revenue?
38. The concept that states that an item is material if its omission or misstatement could influence the decision of users of financial statements is:
39. The accounting postulate that revenue should be recognized only when it is earned and realized or realizable is the:
40. Which concept ensures that accounting methods and policies are applied uniformly from one period to the next?
41. The principle that states 'anticipate no profit but provide for all possible losses' is:
42. What does the Money Measurement Concept imply?
43. The concept that all significant information should be disclosed in the financial statements is known as:
44. Which concept dictates that accounting information should be verifiable and free from bias?
45. The principle of matching revenues with expenses is fundamental to which accounting basis?
46. According to the Dual Aspect Concept, every transaction has:
47. The accounting concept that requires that all transactions and events should be recorded at their original cost is:
48. Which accounting postulate assumes that a business will continue to operate indefinitely?
49. The principle that revenues should be recognized when earned and expenses when incurred, regardless of when cash is exchanged, is known as:
50. Which accounting concept states that a business is a separate entity from its owners?