a51.Consistency in accounting means that a company uses the same accounting principlesfrom one accounting period to the next accounting period.
a52.The quality of consistency pertains to the use of the same accounting principles by firmsin the same industry.
a53.The periodicity assumption states that the business will remain in operation for the foreseeable future.
a54.For accounting purposes, business transactions should be kept separate from thepersonal transactions of the stockholders of the business.
a55.The economic entity assumption states that economic events can be identified with aparticular unit of accountability.
a56.The monetary unit assumption states that transactions that can be measured in terms ofmoney should be recorded in the accounting records.
a57.The going concern assumption is that the business will continue in operation long enoughto carry out its existing objectives and commitments.
a58.A common application of materiality is weighing the factual nature of cost figures versusthe relevance of fair value.
Additional True-False Questions
59. The expense recognition principle requires that expenses be matched with revenues.
60. In general, adjusting entries are required each time financial statements are prepared.
61. Every adjusting entry affects one statement of financial position account and one income statement account.
62. The Accumulated Depreciation account is a contra asset account that is reported on the statement of financial position.
63. Accrued revenues are amounts recorded and received but
not
yet earned.
64. An adjusted trial balance should be prepared before the adjusting entries are made.
a65.When a prepaid expense is initially debited to an expense account, expenses and assetsare both overstated prior to adjustment.