#1
Which of the following is an accounting concept that states that a business will continue to operate indefinitely?
Going concern concept
ExplanationAssumes business continuity.
#2
Under which accounting concept should a business's personal transactions be kept separate from its business transactions?
Entity concept
ExplanationDistinct separation of personal and business finances.
#3
Which accounting concept suggests that financial statements should be prepared on a periodic basis?
Periodicity concept
ExplanationRegular reporting intervals.
#4
What is the main purpose of the dual aspect concept in accounting?
To ensure that every transaction has a dual effect on the accounting equation
ExplanationBalances accounting equations.
#5
Under which accounting concept are transactions recorded at the value at which they were originally acquired?
Cost concept
ExplanationRecords transactions at original purchase price.
#6
What does the accounting concept of 'conservatism' suggest?
Anticipate no profits and anticipate all losses
ExplanationPrepares for worst-case scenarios.
#7
Which accounting concept states that only transactions that can be expressed in monetary terms should be recorded?
Money measurement concept
ExplanationLimits recording to measurable events.
#8
Which accounting concept states that accounting information should be verifiable and based on evidence?
Objectivity concept
ExplanationRequires evidence-backed data.
#9
What does the accounting concept of 'materiality' suggest?
Only significant transactions need to be recorded
ExplanationFocuses on recording significant events.
#10
Under which accounting concept are assets recorded at their original cost?
Cost concept
ExplanationAssets recorded at purchase value.
#11
What does the accrual concept in accounting entail?
Recording revenue and expenses when they occur, not necessarily when cash is exchanged
ExplanationRecognizing transactions when they happen, not just when money changes hands.
#12
Which accounting concept requires that revenue should only be recognized when it is realized or realizable?
Realization concept
ExplanationRevenue recognized upon realization.