Accounting Concepts Individual Problem Set
Short Answer Questions-
1. True or false? The entity concept tells us that we should not co-mingle resources of one entity with another entity's resources. Explain your answer.
2. What is the difference between "equity" and "net assets"?
Matching Questions:
3. Match the following generally accepted accounting principles with their definitions.
a. __ Going Concern
b. __ Conservatism
c. __ Matching
d. __ Cost
e. __ Objective Evidence
f. __ Materiality
g. __ Consistency
h. __ Full Disclosure
(1) The value of what was given up to acquire the item.
(2) In reporting the financial position of the organization, sufficient consideration should be given to the various risks the organization faces.
(3) To avoid misleading users of financial reports, organizations should generally use the same accounting methods from period to period.
(4) Financial statements are prepared based on the assumption that the organization will remain in business for the foreseeable future. If that is not likely to be the case, it must be disclosed.
(5) Financial reports should disclose any information needed to ensure that the reports are a fair presentation.
(6) An error is large enough to be a concern if any individual would make a different decision based on the incorrect information resulting from the error than if he or she possessed the correct information.
(7) Expenses should be recorded in the same accounting period as the revenues that they were responsible for generating.
(8) Financial report should be based on such evidence as reasonable individuals could all agree upon within relatively narrow bounds.
Multiple Choice Questions-
4. Select all of the following accounts that would be considered assets.
a. Cash
b. Patient receivables
c. Mortgage payable
d. Goodwill
e. Notes payable