Question : Matching Questions 84. Match the accounting terms with the descriptions by entering : 1197588

Matching Questions

84. Match the accounting terms with the descriptions by entering the proper number.

1. 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

Transparency

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2. If alternative treatments of items are of equal validity, the alternative resulting in lowest profit should be used

Full disclosure principle

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3. The concept that revenues and the costs incurred in earning those revenues should be recorded in the appropriate accounting periods

Industry practice constraint

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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

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5. In a few limited cases the unusual operating characteristics of an industry, usually based on risk, special accounting principles, and procedures have been developed. These may not conform completely to GAAP for other industries

Matching principle

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6. This is the nongovernmental sector of society. In an accounting context it is the business sector, represented in the accounting rule-making process by the Financial Accounting Standards Board

Realization

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7. Revenue is recognized when it has been earned and realized

Revenue recognition principle

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8. A basic framework developed by the FASB to provide conceptual guidelines for financial accounting and statements. The most important features are statements of qualitative features of statements, basic assumptions underlying statements, basic accounting principles, and modifying constraints

Monetary unit assumption

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9. The concept that information in financial statements cannot be selected or presented in a way to favor one set of interested parties over another

Qualitative characteristic

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10. These are necessary characteristics that must be present in financial statements if they are to be credible

Separate economic entity assumption

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11. 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

Conceptual framework

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12. This is the governmental sector, represented in the accounting rulemaking process by the Securities and Exchange Commission

Public sector

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13. With regards to revenue, it takes place only when cash, a financial claim, or other consideration is received for the sale of goods or services

Materiality constraint

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14. 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

Cost-benefit test

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15. The assumption that a business will continue to operate indefinitely

Going concern assumption

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16. In some cases where an accounting item is deemed too small to affect a user’s decisions, the “required” accounting may be ignored

Historical cost basis principle

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17. It is assumed that only those items and events that can be measured in monetary terms are included in the financial statements. An inherent part of this assumption is that the monetary unit is stable. Thus assets purchased one year may be combined in the accounts with those purchased in other years even though the dollars used in each year actually may have different purchasing power

Neutrality characteristic

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18. 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

Periodicity of income

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19. All information that might affect the user’s interpretation of the profitability and financial condition of a business should be disclosed

Private sector

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