Accounting Principles

Which accounting principle states that a business is distinct from its owner's personal financial affairs?

The monetary unit assumption allows for transactions to be recorded in any currency, providing flexibility in international accounting.

The principle that requires assets to be recorded at their original purchase price, regardless of market fluctuations, is known as ______ cost.

How does capital expenditure differ from revenue expenditure in accounting?

The 'going concern' assumption states that a business will inevitably cease operations within a year.

Briefly explain the significance of 'period reporting' in accounting.

Match each accounting concept with its correct description:

Which of the following best describes the principle of understandability in accounting?

Timeliness in accounting refers to delaying the release of financial information to ensure maximum accuracy.

The concept of ______ requires that financial information be verifiable by independent parties using the same methods, leading to similar results.

Which of the following is the best example of 'relevance' in financial reporting?

According to accrual accounting, revenue is recognized only when cash is received, regardless of when it's earned.

What is the primary purpose of the 'comparability' characteristic in financial reporting?

What is the effect of the historical cost principle on the balance sheet?

If a business expects to operate for at least twelve months, it adheres to the ______ assumption.

Match the term with its accounting equation element:

How does the accounting equation (Assets = Liabilities + Equity) relate to the accounting entity principle?

Verifiability requires that all accountants must use the exact same accounting methods and arrive at the exact same statements.

Explain the significance of monetary unit assumption in maintaining financial records.

Information is said to have the quality of ______ when it influences the decisions of users.