FAR — Financial Accounting & Reporting — Quiz 5

Questions in this quiz (10)

1. Which qualitative characteristic ensures financial information is available quickly enough to be useful?

   • Relevance
   • Timeliness
   • Comparability
   • Verifiability

2. Which accounting concept requires transactions to reflect their economic reality rather than legal form?

   • Cost principle
   • Matching principle
   • Substance over form
   • Periodicity assumption

3. Which accounting method records revenues and expenses when they are earned or incurred?

   • Cash basis accounting
   • Accrual accounting
   • Conservatism principle
   • Consistency principle

4. Which financial statement helps users evaluate a company's liquidity and cash generation?

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

5. Which financial statement element represents increases in equity from non-operating activities?

   • Revenue
   • Gain
   • Expense
   • Liability

6. Which accounting principle requires companies to disclose important financial information?

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

7. Which statement best describes liabilities?

   • Resources owned by a company
   • Claims against company assets
   • Increases in equity
   • Costs incurred to generate revenue

8. Which accounting element represents costs incurred during operations?

   • Revenue
   • Expense
   • Gain
   • Asset

9. A company pays cash to reduce a loan balance. What is the effect on the accounting equation?

   • Assets decrease and liabilities decrease
   • Assets increase and liabilities decrease
   • Assets decrease and equity decreases
   • Liabilities increase and equity increases

10. Which accounting assumption allows financial results to be reported at regular intervals?

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