Accounting Concepts and Principles

“GAAP” refers to ______________.

• Guidelines for Accountants, Accounting Procedures

• General Association of Accounting Practitioners

• General Accounting and Auditing Principles

• Generally Accepted Accounting Principles

The requirement that only transaction data capable of being expressed in terms of money be included in the accounting records relates to the ____________.

• economic entity assumption

• monetary unit assumption

• cost principle

• both b and c

The assumed continuation of a business entity in the absence of evidence to the contrary is an example of the accounting concept of ______________.

• going concern

• comparability

• consistency

• accrual

It is assumed that the revenue is recorded in the period it is earned, regardless of the time the cash is received or collected. What assumptions underlie this accounting transaction?

• economic entity assumption

• accrual basis assumption

• going concern assumption

• monetary unit assumption

Mr. Alexis Cruz, the owner of Bilis Serbisyo Repair Shop, bought supplies for his son's school project. This is a personal transaction of the owner and should not be recorded in the accounting books of the business. What assumptions underlie this accounting transaction?

• economic entity assumption

• accrual basis assumption

• going concern assumption

• monetary unit assumption

GAAP is a widely accepted set of rules, concepts, and principles that govern the application of accounting procedures.

• TRUE

• FALSE

Accountants must use their judgment to record transactions that require estimation. Conservatism principle should be applied by the accountants in exercising judgment.

• TRUE

• FALSE

The monetary unit assumption assumes that the monetary unit used in recording business transactions is stable.

• TRUE

• FALSE

Users of financial reports expect that accounting information is reliable, verifiable, and objective.

• TRUE

• FALSE

Cost is more definite and determinable than other valuation methods.

• TRUE

• FALSE