Match the letter of each principle or assumption or qualitative characteristic with the appropriate statement.
-The assumption that the entity being accounted for will remain in business for an indefinite period of time.
A)Business entity
B)Going concern
C)Time period
D)Monetary unit
E)Historical cost
F)Conservatism
G)Realization
H)Consistency
I)Full disclosure
J)Verifiability
K)Materiality
L)Industry practices

Question

Quizplus · Accepted Answer

The assumption that the entity being accounted for will remain in business for an indefinite period of time is known as the going concern principle.

Answer: D
 The monetary unit assumption assumes that transactions are recorded in a stable currency that can be measured objectively.

Answer: E
 Historical cost is a qualitative characteristic that refers to the recording of transactions at their original cost.

Answer: F
 Conservatism is a principle that guides accountants to avoid overstating assets or income and instead to be cautious and recognize losses and liabilities as soon as possible.

Answer: G
 The realization principle states that revenue should be recognized when it is earned and becomes measurable.

Answer: H
 Consistency refers to the use of the same accounting methods and reporting techniques for similar transactions over time.

Answer: I
 Full disclosure requires that all relevant information about a business or its financial statements must be reported.

Answer: J
 Verifiability is a qualitative characteristic of financial information that allows for independent confirmation of the recorded transactions.

Answer: K
 Materiality is a principle that establishes the importance of a financial transaction or item in accurately reflecting a company's financial position.

Answer: L
 Industry practices refer to the generally accepted accounting principles and practices within a specific industry or sector.

Match the Letter of Each Principle or Assumption or Qualitative