Week 4 Review - Chapter 1

Accounting principles and concepts are broad rules developed to create a common language used by accountants.

• True

• False

A business owner’s personal assets should be included with the assets of the business entity.

• True

• False

The full-disclosure principle states that all accounting records should be available at any time to anyone who wants to look at them.

• True

• False

Accrual accounting is based on the principle of matching sales revenue with expenses.

• True

• False

Changing depreciation methods from one period to the next would not conform to the principle of consistency.

• True

• False

Double-entry-accrual accounting ensures the balance sheet equation is always kept in balance, as long as no errors are made in recording and posting transactions.

• True

• False

The cost principle is concerned with recording items in the accounting record at their actual cost

• True

• False

A restaurant purchased a new point of sale terminal by paying one-half of its cost in cash and owing the balance on account.  The journal entry requires a debit to an asset, and a credit to two liability accounts.

• True

• False

If cash was paid for a two-year $3,600 insurance policy on July 1, the amount of   the insurance expensed on December 31 is:

• $1,800

• $900

• $2,700

• $600