Question 2 (30%) Matching the following statement with the BEST accounting term: Description (1) A detailed inventory record is maintained, recording each purchase and sale during the accounting period. (2) Systematic allocation of the cost of an asset to expense during the period of its useful life. (3) An increase in equity resulting from profitable operation. 4) A liability account used to record the obligation to provide future services when cash has been received before revenues have been earned. Term A. Recognition principle B. Matching principle C. Cost principle D. Materiality concept E. Business entity concept F. Adequate disclosure G. Stable-dollar assumption H. Financial accounting I. Management accounting J. Cash basis accounting K. Accrual basis accounting L. Accounts payable M. Accounts receivable N. Prepaid expense 0. Unearned revenue P. Unrecorded revenue Q. Depreciation expense R. Dividend S. Profit T. Loss U. Retained earnings V. Perpetual inventory system W. Periodic inventory system X. Inventory shrinkage Y. Cost of goods sold Z. Stocktake |(5) The procedure to take a complete physical count of the inventory on hand near year-end. 6) Record revenues when cash received and expenses when cash paid. (7) The accounting principle of providing all facts necessary for proper interpretation of financial statement (8) An asset account used to record the advanced payment before expenses are incurred. (9) Not to record cost of light bulbs as fixed asset rather it will be charged to expense immediately. |(10) The offsetting of revenue with expenses incurred in generating that revenue. |(11) Value of monetary unit or dollar is always stable. |(12) An unrecorded decrease in inventory resulting from the discrepancy between the quantities of goods shown on records and the quantities actually on hand. |(13) The information is provided to support external investment and credit decisions. |(14) Assets should be recorded at amount paid by the company to acquire them. |(15) The ending balance is equal to beginning balance plus profit minus dividend. Match each description in the left column above with the most appropriate term listed in the right column. Answer this question by copying and filling in the following table with the letter representing the particular term. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Description Term (30 marks) END OF TAKE-HOME ASSIGNMENT (TEST) ~
