The going concern assumption allows the entity to use the accrual basis of accounting.Accrual basis requires that the effects of transactions and other events are recognized when theyoccur, and not as cash is received or paidGroup of answer choicesTrueFalse

Accrual basis accounting:Multiple ChoiceIncreases the comparability of financial statements from period to period.Is flawed because it gives complete information about cash flows.Recognizes revenues when received in cash.Recognizes expenses when paid in cash.Eliminates the need for adjusting entries at the end of each period.

Which of the following is not a basic assumption underlying financial accounting?Group of answer choicesPeriodicity assumptionEconomic entity assumptionHistorical cost assumptionGoing concern assumption PreviousNext

Accrual basis of accounting is a system where:Question 5Answera.The receipts are recorded when cash is not received while expenditures are recorded only when cash is paidb.The receipts are recorded only when cash is received while expenditures are recorded only when cash is paidc.Revenue is recorded when there is commitment and expenditure recorded when services is received.d.Revenue recorded when earned and expenditures recorded when benefits are received

The accounting period assumption means that:Group of answer choicesthe cash approach is always used to measure profits.the activities of the owner are assumed to be separate from those of the business.the accrual approach is always used to measure profits.for reporting purposes the economic life of an entity is divided into arbitrary time periods.

Which of the following statements about the going concern assumption is not true?Question 3Select one:a.it supports the systematic allocation of depreciation over an asset’s useful life.b.it is used when an entity goes into liquidation.c.it supports the use of assets such as Prepaid Expenses.d.it can justify the use of historical costs when measuring non-current assets.