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Chapter 14 - Accounting Principles and Reporting Standards
14-33
Chapter 14 - Accounting Principles and Reporting Standards
Matching Questions
84. Match the accounting terms with the descriptions by entering the proper number.
1. If accounting concepts suggest a particular accounting
treatment for an item but it appears that the theoretically
correct treatment would require an unreasonable amount
of work, the accountant may analyze the benefits and
costs of the preferred treatment to see if the benefit
gained from its adoption is justified by the cost
Transparency
3
2. If alternative treatments of items are of equal validity,
the alternative resulting in lowest profit should be used
Full disclosure
principle
12
3. The transparency notion is that information provided in
the financial statements and the notes accompanying
them should provide a clear and accurate picture of the
financial affairs of the company. The key to this idea is
that of disclosure
Industry practice
constraint
16
4. The idea that economic activities of an entity can be
divided logically and identified with specific time
periods, such as the year or quarter
Conservatism
2
5. These are necessary characteristics that must be present
in financial statements if they are to be credible
Matching
principle
7
6. This is the concept that a business is separate from its
owner or owners and the financial statements reflect the
affairs of the business, not those of the owner
Realization
14
7. The concept that revenues and the costs incurred in
earning those revenues should be recorded in the
appropriate accounting periods
Revenue
recognition
principle
18
8. This is the governmental sector, represented in the
accounting rulemaking process by the Securities and
Exchange Commission
Monetary unit
assumption
13
9. The principle that requires assets to be recorded at their
cost at the time they are acquired and that, generally,
long-term assets remain at historical costs in the asset
accounts
Qualitative
characteristic
5
10. In some cases where an accounting item is deemed
too small to affect a user's decisions, the "required"
accounting may be ignored
Separate
economic entity
assumption
6
11. The assumption that a business will continue to
operate indefinitely
Conceptual
framework
19
12. All information that might affect the user's
interpretation of the profitability and financial condition
of a business should be disclosed
Public sector
8
