FABM 1- SUMMATIVE TEST #1

In the event of conflict between the economic substance of a transaction and its legal form, the economic substance shall prevail. This concept is known as:

• Faithful Representation

• Completeness

• Substance over form

• Form over substance

The underlying assumption which suggests that an enterprise will continue in operation for the foreseeable future.

• Consistency

• Going Concern

• Entity Concept

• Materiality

A business transaction is the occurrence of an event or of a condition that must be recorded.

• True

• False

The financial statements should be stated in terms of a common financial denominator.

• Conservatism

• Time Period

• Monetary Unit Principle

• Going Concern

A professional accountant should straightforward and honest in all professional and business relationships. This is in consonance with the fundamental principle of?

• Integrity

• Objectivity

• Confidentiality

• Professional competence and due care

For accounting purposes, a business and its owner are considered one and the same.

• False

• True

The set of guidelines and procedures that constitute acceptable accounting practice at a given time is GAAP, which stands for Generally Accepted Accounting Process.

• True

• False

This principle states that acquired assets should be recorded at their actual cost and not at what management thinks they are worth as at reporting date.

• Historical Cost

• Consistency Principle

• Entity Concept

• Materiality Principle

It is called the language of business.

• Accounting

• Management

• Accountancy

• Accountant

Expenses cause decreases in owner's equity and are recorded by debits.

• True

• False