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 ____________.

• Business Entity

• Unit of Measure

• Historical Cost

• 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

• Materiality

• Objective Evidence

• Consistent Reporting

Revenue is recorded in the period it is earned, regardless of the time the cash is received or collected. What principle underlies this accounting transaction?

• Historical Cost

• Realization of Revenue

• Matching Revenue and Expenses

• Neutrality

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?

• Business Entity

• Full Disclosure

• Going Concern

• Objective Evidence

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

• TRUE

• FALSE

All relevant information should be included in the financial reports.

Assume that the company will continue indefinitely.

All transactions should be supported by unbiased evidence.

Expenses should be recorded in the period when the revenue is generated.