Accounting Concepts Quiz
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Questions and Answers

Which step in recording transactions involves analyzing accounts that will be impacted in the accounting equation?

  • Post
  • Record
  • Prepare
  • Analyze (correct)

    • When should revenue be recognized according to accrual accounting concepts?

  • When performance obligations are satisfied (correct)
  • When expenses are incurred
  • When cash is received
  • When goods are delivered

    • What does the term 'Adjusting Entry' refer to in accounting?

  • A cash transaction adjustment
  • A standard bookkeeping error correction
  • A credit for prepaid expenses with no cash involved (correct)
  • An entry that reduces shareholder equity

    • Which of the following is NOT a step in the IFRS revenue recognition process?

    <p>Record the cash received</p> Signup and view all the answers

    In the accounting equation, which of the following accounts typically represents shareholders' equity?

    <p>Common Shares</p> Signup and view all the answers

    What is encompassed within current assets on the Statement of Financial Position?

    <p>Accounts receivable</p> Signup and view all the answers

    Which of the following describes non-current liabilities?

    <p>Expected to be paid over one year</p> Signup and view all the answers

    What do retained earnings represent in shareholders equity?

    <p>Net income minus dividends declared</p> Signup and view all the answers

    Which item is not classified as a current liability?

    <p>Bonds payable</p> Signup and view all the answers

    What factors influence the complexity of an Accounting Information System?

    <p>Type of business and information requirements</p> Signup and view all the answers

    What does the concept of verifiability in financial reporting imply?

    <p>It must be presented in a way that can be independently verified.</p> Signup and view all the answers

    Which of the following best describes the cost or cost-benefit constraint in financial reporting?

    <p>Information that adds more value than it costs should be included.</p> Signup and view all the answers

    What is the primary focus of the statement of income?

    <p>Reporting the revenues and expenses leading to net income.</p> Signup and view all the answers

    Which assumption states that the company is expected to continue operating indefinitely?

    <p>Going Concern</p> Signup and view all the answers

    How is net income calculated according to the statement of income?

    <p>Income before income tax minus income tax expense.</p> Signup and view all the answers

    When preparing financial statements, what does it mean to follow the historical cost principle?

    <p>Items are recorded at the price paid to acquire them.</p> Signup and view all the answers

    Which of the following is not a qualitative characteristic of financial reporting?

    <p>Historical Cost</p> Signup and view all the answers

    What is the primary purpose of the statement of changes in equity?

    <p>Show the changes in equity elements over time.</p> Signup and view all the answers

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