Generally accepted accounting principles
Quiz by Sushila Yadav
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21 questions
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- Q1Which accounting principle requires that assets are recorded at their original cost on the balance sheet?Historical cost principleRevenue recognition principleFair value principleMatching principle30s
- Q2What is the principle of conservatism in Generally Accepted Accounting Principles (GAAP) focused on?Recognizing both revenues and expenses immediately upon transactionRecognizing revenues as soon as possible, but expenses only when paidDelaying the recognition of both revenues and expenses until a later periodRecognizing expenses and liabilities as soon as possible, but revenues only when realized30s
- Q3What is the purpose of the Going Concern principle in Generally Accepted Accounting Principles (GAAP)?Emphasizing the importance of matching revenues with expensesAssessing the fair value of assets and liabilities for financial reportingRecognizing revenues when cash is received, regardless of when earnedAssuming that a company will continue its operations in the foreseeable future30s
- Q4Which type of accounting basis is required by Generally Accepted Accounting Principles (GAAP) for most businesses?Hybrid basis accountingCash basis accountingAccrual basis accountingModified basis accounting30s
- Q5Which accounting principle requires that expenses be recorded in the same period as the revenues they help to generate?Conservatism principleMatching principleEntity concept principleMateriality principle30s
- Q6Which of the following is a fundamental principle of Generally Accepted Accounting Principles (GAAP)?Cash basis accountingAccrual basis accountingBarter basis accountingInterest basis accounting30s
- Q7Under Generally Accepted Accounting Principles (GAAP), what does the term 'consistency' refer to?Consistent application of accounting policies from one period to the nextApplying different accounting methods for different transactionsNot following any specific accounting standardsChanging accounting policies frequently30s
- Q8Which of the following best describes Generally Accepted Accounting Principles (GAAP)?A specific accounting software used by all companies.A set of standard principles, conventions, and rules that accountants follow when preparing financial statements.A set of guidelines for marketing strategies.A government agency responsible for auditing financial records.30s
- Q9What is the primary purpose of Generally Accepted Accounting Principles (GAAP)?To control government spending.To increase the profits of a company.To provide a standardized framework for financial reporting.To eliminate competition among accounting firms.30s
- Q10Which of the following is a key characteristic of Generally Accepted Accounting Principles (GAAP)?OverstatementConservatismManipulationAggressiveness30s
- Q11Which principle of Generally Accepted Accounting Principles (GAAP) states that financial statements should be based on the assumption that a business will continue to operate indefinitely?Materiality principleConservatism principleConsistency principleGoing concern principle30s
- Q12What is the purpose of the consistency principle in Generally Accepted Accounting Principles (GAAP)?To maximize profits for the company.To prevent stakeholders from accessing financial data.To ensure that accounting methods and practices remain unchanged across different accounting periods.To distort financial information for tax purposes.30s
- Q13Which accounting principle dictates that expenses should be recorded in the same period as the related revenues?Materiality principleMatching principleRelevance principleConsistency principle30s
- Q14Which principle of Generally Accepted Accounting Principles (GAAP) states that accounting information should be recorded based on actual costs, rather than market values?Revenue recognition principleCost principleMateriality principleMatching principle30s
- Q15Why is the Principle of Conservatism important in accounting?It promotes aggressive financial reporting.It helps prevent overstatement of assets and income.It encourages overstatement of liabilities.It has no impact on financial statements.30s