Professional Documents
Culture Documents
ACCOUNTING CONCEPTS
5. General-purpose information is
a. not intended to satisfy the specialized needs of individual users.
b. intended to satisfy the specialized needs of individual users
c. not intended to satisfy the common needs of individual users.
d. Provided by managerial accounting.
7. The body of rules and principles which govern accounting practices is referred to as
a. Accounting practice c. Accounting concepts
b. Accounting principles d. Accounting theory
8. The layers of the structure of accounting theory include the following except
a. methods and procedures c. measurement and recognition
b. principles d. postulates and conventions
9. The basic assumption or premises on which accounting principles rest are called
a. accounting postulates c. accounting principles
b. accounting procedures d. accounting laws
10. The normative attitudes or ideas of the accounting profession as to what ought to
represent good accounting practice and which modify the application of accounting
principles are known as
a. accounting postulates c. accounting procedures
b. accounting conventions d. accounting principles
11. The general guidelines used in accounting practice that are based on substantial
authoritative support are called
a. Accounting postulates c. accounting procedures
b. accounting conventions d. accounting principles
12. The specific methods used by accountants in carrying out t5he general guidelines
provided by GAAP, including the numerous rules specifying how financial data should be
recorded, classified, summarized and reported are referred to as
a. accounting postulates c. accounting procedures
b. accounting conventions d. accounting principles
13. “The accounting entity is assumed to be separate and distinct from other entities and
from the owners, managers and employees which constitute the firm”. This postulate is
referred to as
a. Matching c. Historical cost
b. Going concern d. Specific-separate-entity
14. Unless there is specific evidence to the contrary, the firm will continue to be in
existence in the foreseeable future. This postulate is referred to as
a. Matching c. Historical cost
b. Going concern d. Specific-separate-entity
15. “Money is the best measuring unit of a firm’s assets, liabilities and equity, as well as
changes therein; its instability is immaterial”. This postulate is referred to as
a. Historical cost c. Money-measuring unit
b. Revenue recognition d. Fiscal period
16. “Cost is normally the proper money measurement of a firm’s assets, liabilities, and
equity, and changes in them because it is objective, verifiable and convenient to obtain,
approximating value at time of acquisition. “ This postulate is referred to as
a. Historical cost c. Money measuring unit
b. Revenue recognition d. Fiscal period
17. “The life of a business firm can be segmented into short run time periods in order to
provide timely financial information to aid in financial decision making; hence, periodic
reporting implies the use of accrual accounting and use of estimates ( approximations)
and informed judgment by accountants.” This postulate is referred to as
a. Historical cost c. Money measuring unit
b. Revenue recognition d. Fiscal period
18. “The point of sale when goods are delivered or services are rendered, is the time at
which revenue is to be recognized.” This postulate is referred to as
a. Historical cost c. Money measuring unit
b. Revenue recognition d. Fiscal period
19.“Goods and services used (“expenses”) during the fiscal period can be associated with
the revenue earned during the same fiscal period”. This postulate referred to as
a. Matching c. Historical Cost
b. Going concern d. Specific-separate entity
20. “Exception to the application of accounting theory are permitted if the amount
involve is not material; financial reporting is concerned only with information that is
significant enough to affect evaluations or decisions.” This convention is called
a. Conservatism c. Consistency
b. Objectivity d. Materiality
21. “The same accounting procedures for a given entity should be used from one period
to the next. Changes may however be made if it will result in more accurate or useful
information for decision making provided it disclosed”. The convention is called
a. Conservatism c. Consistency
b. Objectivity d. Materiality
24. “The accountant should recognize all possible losses but anticipate no profit. Where
alternative courses of action are available, he should choose the alternative least
favorable to owners’ equity.
a. Consistency c. Objectivity
b. Comparability d. Conservatism