ACCT 211 LIBERTY UNIVERSITY CHAPTER 1
TO 3 ACTUAL TEST PAPER 2026
QUESTIONS WITH ANSWERS GRADED A+
⩥ Users of Financial Information. Answer: 1. Internal
2. External
⩥ Internal Users. Answer: Internal users of accounting information ARE
directly involved in managing and operating an organization.
⩥ External Users. Answer: External users of accounting information are
NOT directly involved in running the organization
⩥ 3 Parts of the Fraud Triangle. Answer: Opportunity
Rationalization
Financial Pressure
⩥ Principles of Accounting. Answer: 1. Measurement Principle
(or Cost Principle)
Accounting information is based on actual cost. Actual cost is
considered objective.
2. Revenue Recognition Principle
,a. Recognize revenue when it is earned.
b. Proceeds need not be in cash.
c. Measure revenue by cash received plus cash value of items received
3. Expense Recognition Principle
(or Matching Principle): A company must record its expenses incurred to
generate the revenue reported.
4. Full Disclosure Principle: A company is required to report the details
behind financial statements that would impact users' decisions
⩥ Accounting Assumptions. Answer: 1.Going-Concern Assumption
Reflects assumption that the business will continue operating instead of
being closed or sold.
2.Monetary Unit Assumption
Express transactions and events in monetary, or money, units.
3.Business Entity Assumption
A business is accounted for separately from other business entities,
including its owner.
4.Time Period Assumption
Presumes that the life of a company can be divided into time periods,
such as months and years
, ⩥ Sole Proprietor. Answer: -one owner allowed
-business not taxed
-business entity
⩥ Partnership. Answer: -business entity
-not taxed
-not limited liability
-not legal entity
-not unlimited life
⩥ Corporation. Answer: -one owner allowed
-business taxed
-limited liability
-business entity
-legal entity
-unlimited life
⩥ Accounting Contraints. Answer: 1. Materiality: Only information that
would influence the decisions of a reasonable person needs to be
disclosed. Materiality is a function of the nature of the item and/or dollar
amount.
TO 3 ACTUAL TEST PAPER 2026
QUESTIONS WITH ANSWERS GRADED A+
⩥ Users of Financial Information. Answer: 1. Internal
2. External
⩥ Internal Users. Answer: Internal users of accounting information ARE
directly involved in managing and operating an organization.
⩥ External Users. Answer: External users of accounting information are
NOT directly involved in running the organization
⩥ 3 Parts of the Fraud Triangle. Answer: Opportunity
Rationalization
Financial Pressure
⩥ Principles of Accounting. Answer: 1. Measurement Principle
(or Cost Principle)
Accounting information is based on actual cost. Actual cost is
considered objective.
2. Revenue Recognition Principle
,a. Recognize revenue when it is earned.
b. Proceeds need not be in cash.
c. Measure revenue by cash received plus cash value of items received
3. Expense Recognition Principle
(or Matching Principle): A company must record its expenses incurred to
generate the revenue reported.
4. Full Disclosure Principle: A company is required to report the details
behind financial statements that would impact users' decisions
⩥ Accounting Assumptions. Answer: 1.Going-Concern Assumption
Reflects assumption that the business will continue operating instead of
being closed or sold.
2.Monetary Unit Assumption
Express transactions and events in monetary, or money, units.
3.Business Entity Assumption
A business is accounted for separately from other business entities,
including its owner.
4.Time Period Assumption
Presumes that the life of a company can be divided into time periods,
such as months and years
, ⩥ Sole Proprietor. Answer: -one owner allowed
-business not taxed
-business entity
⩥ Partnership. Answer: -business entity
-not taxed
-not limited liability
-not legal entity
-not unlimited life
⩥ Corporation. Answer: -one owner allowed
-business taxed
-limited liability
-business entity
-legal entity
-unlimited life
⩥ Accounting Contraints. Answer: 1. Materiality: Only information that
would influence the decisions of a reasonable person needs to be
disclosed. Materiality is a function of the nature of the item and/or dollar
amount.
