Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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Which principle specifies that cost or expenses
should be recorded at the same time as the revenue to which they correspond?
a. | Prudence principle | b. | Matching principle | c. | Going concern
principle | d. | Consistency principle
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2.
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Which measurement basis is most commonly used by
enterprises to prepare the financial statements because it is the one that requires the fewest
hypotheses?
a. | Historical cost | b. | Realizable value | c. | Replacement
cost | d. | Present value
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3.
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A business owes a supplier 500 CU and
simultaneously has a claim on that very supplier for the same amount. What should be reported in the
balance sheet?
a. | Nothing. | b. | Only a balance of 500 CU on the liability side (corresponding to the debt to
the supplier). | c. | Only a balance of
500 CU on the asset side (corresponding to the claim on the supplier). | d. | A balance of 500 CU on the asset side and a balance of 500 on the liability
side. |
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4.
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Transactions and other events are accounted for and
presented in accordance with:
a. | Their legal form. | b. | Their materiality. | c. | Their substance
and economic reality. | d. | Their tax
impact. |
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5.
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Which of the following statements is not
consistent with the fact that valuation must be made on a prudent basis?
a. | Only profits concretely and definitively earned on the
balance sheet date may be included. | b. | If necessary, the
creation of excessive provisions or the deliberate overstatement of assets is
allowed. | c. | Account must be taken of all foreseeable liabilities and
potential losses arising in the course of the financial year concerned or of a previous one, even if
such liabilities or losses become apparent only between the date of the balance sheet and the date on
which it is drawn up. | d. | Account must be
taken of all depreciation whether the result of the financial year is a loss or a
profit. |
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6.
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When will the end-of-period entries be carried
out?
a. | Every time the books are
closed | b. | Every time an entry is
recorded | c. | When the business is
liquidated | d. | Every time a major
event is recognized |
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7.
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When do revenues affect net income?
a. | In the period during which they are
earned | b. | In the period in which their cash equivalent is
collected | c. | Both a and b | d. | Neither a nor b
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8.
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Interest revenue on a loan granted to an employee
becomes due on the anniversary of the loan, 31 March. The annual interest on the loan is 120 CU. How
much is recorded in the income statement as of 31 December?
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9.
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What effect does the end-of-period entry
recognizing periodic depreciation have on the basic accounting equation?
a. | Decrease in assets, decrease in
liabilities | b. | Decrease in
assets, increase in shareholders’ equity | c. | Decrease in
assets, increase in liabilities | d. | Decrease in
assets, decrease in shareholders’ equity
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10.
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The opening balance sheet for each financial year
must correspond to the closing balance sheet for the preceding financial year.
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