1) Joe, a business owner, incurs expenses for the repair of his house. This expense should not be reflected in the financial statements of his business. It should be considered as a personal expense. a) Accrual Basis Assumption b) Going Concern Assumption c) Monetary Unit Assumption d) Time Period Assumption e) Economic Entity Assumption 2) Credit sales are recorded by a company as revenues even though no cash is received. a) Accrual Basis Assumption b) Going Concern Assumption c) Monetary Unit Assumption d) Time Period Assumption e) Economic Entity Assumption 3) A company prepares financial reports every year for the benefit of its stockholders. a) Accrual Basis Assumption b) Going Concern Assumption c) Monetary Unit Assumption d) Time Period Assumption e) Economic Entity Assumption 4) This accounting assumption assumes that the company has an indefinite life. a) Accrual Basis Assumption b) Going Concern Assumption c) Monetary Unit Assumption d) Time Period Assumption e) Economic Entity Assumption 5) The CEO of JAC Enterprise conducts a lecture to the employees in order to raise the employees’ morale and complete the current projects on time. As the value of the lecture cannot be measured in terms of money, it cannot be recorded in the books of accounts of JAC Enterprisempany prepares financial reports every year for the benefit of its stockholders. a) Accrual Basis Assumption b) Going Concern Assumption c) Monetary Unit Assumption d) Time Period Assumption e) Economic Entity Assumption

Accounting Concepts

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