Qualitative Charateristics

Unit 1 Multiple Choice –
Qualitative Characteristics and Accounting Principles

Select the most appropriate qualitative characteristic or accounting principle that would apply to each of the following scenarios. 1. Anna Conda is the owner of Reptile World. The business drew a cheque for $15,000 payable to Globe Trotter Travel for a family holiday. Which accounting principle applies?

 Historical Cost
 Going Concern
 Entity
 Monetary

2. Which one of the following is NOT a qualitative characteristic

 Relevance
 Understandability
 Conservatism
 Comparability

3. Arthur Allsop is the owner of Sugo, an advertising agency who provides advertising services to clients on the basis of three, six and twelve months. The business reports the total amount of all advertising contracts as revenue for the month in which the contracts are signed and cash received. Which accounting principle applies?

 Going Concern
 Reporting Period
 Relevance
 Entity

4. The owner of a business has argued that the value of Furniture shown in the Balance Sheet is incorrect as it shows the potential market value of $40,000 rather than its original purchase price of $55.000 (inv 246). Which accounting principle has been breached?

 Monetary
 Relevance
 Historical Cost
 Conservatism

5. The business wants to give the impression that it is doing well. Instead of valuing stock at $49,000 cost price, it values the stock at the expected selling price of $79,000. Which qualitative characteristic has been breached

 Relevance
 Monetary
 Comparability
 Conservatism

6. The Brice brothers run three small successful businesses. The transactions of each of these businesses are combined and recorded in the same set of accounts. Which accounting principle has been breached?

 Relevance
 Entity
 Going Concern
 Reporting Period

7. Adam owns the Eureka Bookstore. During a recent lunch break he found a jacket on sale for $100 that