FAR — Financial Accounting & Reporting — Quiz 2

Questions in this quiz (10)

1. Which accounting concept requires that revenues be recorded when earned and not when cash is received?

   • Matching principle
   • Revenue recognition principle
   • Cost principle
   • Full disclosure principle

2. Which financial statement shows a company's assets, liabilities, and equity at a specific date?

   • Income statement
   • Statement of retained earnings
   • Balance sheet
   • Statement of cash flows

3. Which accounting assumption separates business transactions from owners' personal transactions?

   • Periodicity assumption
   • Going concern assumption
   • Economic entity assumption
   • Monetary unit assumption

4. Which accounting principle states that assets should be recorded at their original purchase price?

   • Cost principle
   • Matching principle
   • Revenue recognition principle
   • Full disclosure principle

5. Which financial statement reports how a company generated and used cash during a period?

   • Income statement
   • Statement of retained earnings
   • Balance sheet
   • Statement of cash flows

6. Which accounting assumption assumes that a company will remain in operation for the foreseeable future?

   • Periodicity assumption
   • Economic entity assumption
   • Going concern assumption
   • Monetary unit assumption

7. Which accounting assumption divides a company's life into reporting periods such as months or years?

   • Going concern assumption
   • Monetary unit assumption
   • Periodicity assumption
   • Economic entity assumption

8. Which accounting principle requires companies to provide all relevant information that could affect users' decisions?

   • Matching principle
   • Full disclosure principle
   • Cost principle
   • Revenue recognition principle

9. Which financial statement element represents resources owned or controlled by a company?

   • Liability
   • Revenue
   • Asset
   • Expense

10. Which financial statement element represents amounts owed by a company to creditors?

    • Expense
    • Revenue
    • Liability
    • Equity