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Bookkeeping Basics Exam Questions With Solutions 100% Correct
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Bookkeeping Basics Exam Questions With Solutions 100% Correct Accounting Principle #1 Economic Entity Assumption* The business and its financial transactions are separate from the owner's personal financial transactions. Accounting Principle #4 Cost Principle 1) Financial transactions are s...

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  • September 15, 2024
  • 6
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • ASB BOOKKEEPING
  • ASB BOOKKEEPING

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Bookkeeping Basics Exam Questions With
Solutions 100% Correct

Accounting Principle #1


Economic Entity Assumption* The business and its financial transactions are separate

from the owner's personal financial transactions.




Accounting Principle #4


Cost Principle 1) Financial transactions are shown, forever, as the original and historical

cost.

2) We do NOT adjust for inflation or the increase or decrease in the value of an item.




Accounting Principle #7


Matching Principle* 1) forces us to use the accrual basis of accounting.


2) Expenses are matched with revenue (ex: cost of a product is shown when sold--sales

commission is reflected in the period the sale is recorded).




Accounting Principle #8


Revenue Recognition Principle 1) Revenue/sales/income is shown in the financial

statement when a service is performed or a good is sold.

, Bookkeeping Basics Exam Questions With
Solutions 100% Correct
2) It doesn't matter when cash is actually received for the service performed or the good sold.




Accounting Principle #10


Conservatism Principle* When faced with a choice on financial statements, choose the

option that reflects: 1) decrease in net income, and/or 2) decrease in assets/equity, and/or increase

in liabilities.




Order of Accounts in


Chart of Accounts Assets


Liabilities

Equity

Revenue

Expenses




Trial Balance two-column summary of all debits and credits in the Chart of Accounts


1) Is shown at end of an accounting period

2) Lists all the accounts in numerical order with assets first and expenses last

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