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Questions and Answers
An accounting period longer than 12 months is called an interim period.
False
The stable monetary unit in the Philippines is dollar.
False
Materiality Concept states that an item is material if its omission could influence economic decisions.
True
The Cost-benefit principle suggests that the cost of processing information should exceed the benefits.
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Consistency concept requires applying accounting policies inconsistently from one period to another.
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A fiscal year period in the Philippines starts on July 1 and ends on June 30 of the same year.
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Measuring assets at historical cost is suitable only when the business is a going concern.
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The liquidating concern assumption involves measuring assets at their net buying price.
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Matching principle states that costs are recognized as expenses only when the related revenue is recognized.
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Accrual basis of accounting records economic events at the point in time when they affect cash.
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Prudence principle in accounting suggests choosing a potentially favorable outcome over an unfavorable one.
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The time period concept divides the life of a business into equal short periods known as reporting periods.
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The Separate Entity Concept states that the business is not viewed as separate from its owner(s).
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According to the Historical Cost Concept, assets are recorded based on their current market value.
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Creditors are interested in the liquidity and business model of the company when deciding to extend credit.
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Suppliers are mainly concerned with the environmental safeguards of the business.
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Government's main concern regarding businesses is related to their obligations in paying taxes.
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Public interest in businesses primarily revolves around well-being contributions to society.
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