Accounting Principles

Tarzan corporation is now in its 30th year of business. The founder of the company is planning to retire at the end of the year and turn the business over to his daughter. The financial statements for this year are then restated to their liquidation values - that is, the statements are restated such that it appears that the business will be ending at the end of the year. Which accounting principle or assumption is being followed or violated?

• Matching Principle

• Going-Concern

• Consistency

Jane Company purchased a 20-acre parcel of property on which to build a new factory. The company recorded the property on the records at the amount of cash given to acquire it. Which accounting principle is being followed?

• Monetary Unit Principle

• Cost Principle

• Objectivity Principle

Clay Tonn enters into an agreement to operate a new law firm in partnership with a friend. Each partner will make initial cash investment of P10,000. Clay Tonn opens a checking account in the name of the partnership and transfers P10,000 from his personal account into the new account. Which accounting principle is being followed?

• Time Period

• Materiality Principle

• Business Entity Principle

Kala Corp has a division in Japan. Prior to preparing the financial statements for the company and all of its foreign divisions, the Japanese Ministry of Finance announced a possible devaluation of the yen for the incoming year. Since this has not happened Kala Corp. did not include this information in this year's financial statements. Which accounting principle is being violated?

• Materiality

• DIsclosure

• Conservatism

Terk Company has always expensed items under P100, even if they have a useful life of over one year. Which accounting principle is being followed?

• Cost Principle

• Time Period

• Materiality Principle

Paper clips were automatically charged to expense. Which accounting principle is applicable?

• Materiality

• Disclosure

• Business Entity

The telephone bill for the month, received at the end of the month, was recorded although it will be paid on the third day following the month. Which accounting concept is applicable?

• Accrual Basis

• Materiality

• Cost Principle

There are around five restaurants in the vicinity and the business doesn't earn much due to stiff competition. However, the accountant prepares the annual financial statements with the assumption that the business will not close anytime. Which accounting principle is being observed?

• Going Concern

• Business Entity

• Disclosure

Separate financial statements were prepared for the restaurant and the barber shop of Mr. Gwapito. Which accounting principle is being observed?

• Accrual Basis

• Going Concern

• Business Entity

Even though a project will take five years to finish, an ANNUAL report was still furnished to the investors. Which accounting concept is being observed?

• Time period

• Business entity

• Going concern