Accounting Principles Quiz

The Historical Cost concept requires assets to be recorded at their:

• Market value

• Original purchase price

• Replacement cost

• Present value

Under the Historical Cost concept, which of the following is true?

• Assets are recorded at their depreciated value

• Assets are recorded at their market value

• Assets are recorded at their original cost

• Assets are recorded at their future value

Which document would be considered objective evidence for recording a transaction?

• Verbal agreement

• Personal opinion

• Invoice

• Management's expectation

Under the Matching principle, if revenue is earned in January, when should related expenses be recorded?

• In January

• In the previous period

• When paid

• At the end of the fiscal year

Which of the following is an example of an accrual?

• Recording rent expense when paid

• Recording sales revenue when cash is received

• Recording salary expense in the month it is earned

• Recording utility expense when the bill is paid

Under the Business Entity concept, which of the following is true?

• Owner's personal expenses are recorded in the business accounts

• Business transactions are kept separate from the owner's personal transactions

• Both personal and business transactions are combined

• Only personal transactions are recorded

Which of the following best describes the Going Concern assumption?

• The business will be liquidated

• The business will continue for the foreseeable future

• The business will merge with another entity

• The business will cease operations

Which of the following transactions would be recorded under the Monetary Measurement concept?

• Number of employees hired

• Purchase of office supplies for RM500

• Management's opinions

• Customer satisfaction

Under the Consistency principle, which of the following is true?

• Depreciation methods can change each year

• Inventory valuation methods remain the same

• Financial statements are prepared using varying methods

• Different methods are used for different accounts

An example of an Accounting Period is:

• The lifespan of the business

• January 1 to December 31

• A decade

• The period from birth to death of the owner