FAC1502 UNIT 1 BASIC PRINCIPLES OF
ACCOUNTING FINAL PAPER PRACTICE
SOLUTION TESTED QUESTIONS WITH
COMPLETE ANSWERS
●● Full Disclosure Principle
Answer: Financial statements contain all information necessary to
understand a business' financial condition.
●● Business Entity Principle
Answer: Financial information is recorded and reported separately from
the owner's personal financial information. Accounts are kept for entities
and not the people who own or run the company.
●● Consistent Reporting Principle
Answer: The same accounting procedures must be followed in the same
way in each accounting period. Once an entity decides on one method of
reporting (i.e. a method of calculating depreciation), it must use that
same method for subsequent events.
●● Going Concern Assumption Principle
Answer: Financial statements are prepared with the expectation that a
business will remain in operation indefinitely.
ACCOUNTING FINAL PAPER PRACTICE
SOLUTION TESTED QUESTIONS WITH
COMPLETE ANSWERS
●● Full Disclosure Principle
Answer: Financial statements contain all information necessary to
understand a business' financial condition.
●● Business Entity Principle
Answer: Financial information is recorded and reported separately from
the owner's personal financial information. Accounts are kept for entities
and not the people who own or run the company.
●● Consistent Reporting Principle
Answer: The same accounting procedures must be followed in the same
way in each accounting period. Once an entity decides on one method of
reporting (i.e. a method of calculating depreciation), it must use that
same method for subsequent events.
●● Going Concern Assumption Principle
Answer: Financial statements are prepared with the expectation that a
business will remain in operation indefinitely.
