18 Questions
What is the primary reason for using historical cost in accounting?
To provide objective and verifiable data in financial reports
Which of the following is a consequence of the consistency concept in accounting?
Companies must use the same accounting methods for all periods
What is the main purpose of the accruals or matching concept in accounting?
To recognize revenues when they are earned
Which of the following is a characteristic of reliable financial information?
All of the above
What is the primary reason for preparing financial statements on a yearly basis?
To provide timely financial information
Which of the following is a consequence of the verifiability concept in accounting?
Accountants can provide objective and verifiable data in their reports
What is the primary objective of accounting principles and concepts?
To provide assurance to users about the credibility and reliability of financial information
Which accounting concept deals with the adoption of a specific accounting method and its consistent application?
Policy consideration
What is the primary goal of the economic entity concept?
To separate the business and its owner's financial transactions
Which accounting concept is related to the faithful representation of financial transactions?
Verifiability
What is the primary focus of the timeliness concept in accounting?
To provide stakeholders with timely financial information
Which accounting concept is related to the consistency of financial reporting?
Consistency
What is the primary objective of matching revenues with expenses in a business?
To ensure accurate financial reporting and decision-making
Which of the following expenses would be classified as an accrual?
Wages incurred but not yet paid in the current period
What is the main consideration in determining whether an item is material or immaterial?
The nature of the item and its impact on profit
Why are small payments such as postage and stationery expenses aggregated together?
To comply with accounting standards for materiality
What is the benefit of timeliness in financial reporting?
It enables stakeholders to make informed decisions
Which of the following is an example of verifiability in financial reporting?
Providing supporting evidence for financial transactions
Test your understanding of financial statements and the cost concept in accounting. Learn how to prepare and analyze financial statements, and understand the importance of cost in accounting records.
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