Accounting: Chapter 7

Q1:

The ... principle states that income and expenses should be entered in the financial records when they are earned or incurred and not when the money is received.

• matching

• prudence

Which accounting principle requires a business to account for all potential losses?

• Prudence

• Money measurement

An accountant has informed a business owner that they only need to know the value of their drawings and not that the owner purchased a holiday with this money. This is in accordance with the ... principle

• going concern

• business entity

Hey there! Anika's business has taken an order for goods but the goods have not left the warehouse. According to the ... principle, the business should not record the revenue from the sale.

• Realisation

• Materiality

The management of QNet are exceptionally well qualified. However, the skills cannot be recorded in the statement of financial position due to the ... principle

• Historic cost

• money measurement

A business always uses the First In First Out (FIFO) method to value its closing inventory. This meets the requirements of the ... principle

• consistency

• duality

Which accounting principle describes the concept of double entry book-keeping?

• duality

• matching

An accounting clerk is considering accounting for every sheet of paper that is used in the office. According to the ... principle, items of a low value should not be accounted for.

• money measurement

• materiality

Which accounting principle states that financial statements are prepared on the basis that the business is going to continue for the foreseeable future?

• Business entity

• Going concern

Which accounting principle requires a business to include its motor vehicles at their net book value in the statement of financial position?

• Historic cost

• Prudence