1.

Provides the foundation for the accounting process

Answer: Accounting Assumptions

2. Requires that companies include in the accounting records only transaction data can be

expresses in money terms. This assumption enables accounting to quantify (measure) economic

events

Answer: Monetary Unit Assumption

3. Requires that the activities of the entity be kept separate and distinct from the activities of its

owner and all other economic entities

Answer: Economic Entity Assumption

4. States that the economic life of a business can be divided into artificial time periods and that

meaningful accounting reports can be prepared for each period

Answer: Time Period Assumption

5. State that assets and liabilities should be reported at fair value. This principle is usually used

in situations where assets are actively traded

Answer: Fair Value Principle

6. Companies recognize revenue in the accounting period in which the performance obligation

is satisfied

Answer: Revenue Recognition Principle

7. Companies must record assets at their costs. This is true not only at the time the asset is

purchased but also over the time the asset is held

Answer: Historical Cost Principle/Cost Principle

8. Efforts (expenses) should be matched with results (revenue)

Answer: Expense Recognition Principle (Matching Principle)

9. Common set of standards that are generally accepted and universally practiced

Answer: Generally- Accepted Principle (GAAP)

10. Requires that companies disclose circumstances and events that matter to financial

statement users

Answer: Full Disclosure Principle