Accounting Rules — Practice Questions

Question 1

The principle that the owner and the business are separate is:

Accepted Answer

business entity — The business entity principle separates owner and business.

Question 2

Recording assets at their original cost follows the ___ principle.

Accepted Answer

historical cost — That is the historical cost principle.

Question 3

Not overstating profits or assets follows the principle of:

Accepted Answer

prudence — Prudence means not overstating profit or assets.

Question 4

Assuming the business will continue operating is the ___ principle.

Accepted Answer

going concern — That is the going concern principle.

Question 5

Matching income to the expenses of the same period is the:

Accepted Answer

accruals (matching) principle — That is the accruals (matching) principle.

Question 6

Using the same methods each year follows the principle of:

Accepted Answer

consistency — Using the same methods each year is consistency.