Author Question: A debit may signify a decrease in a(n) a. liability account. b. asset account. c. revenue ... (Read 400 times)

Garrulous · **on:** Jul 6, 2018

A debit may signify a decrease in a(n)
a. liability account.
b. asset account.
c. revenue account.
d. liability and a revenue account.
e. asset and a revenue account.

Question 2

Which of the following is a difference between conservatism principle and materiality principle?

A) Conservatism requires that financial reporting should neither disproportionately overstate nor understate a situation, whereas materiality holds that strict adherence to accounting principles is not required for items of little significance.
B) Conservatism is listed as a constraint in the conceptual framework determined by the American financial community, whereas materiality is no longer listed as a constraint in the conceptual framework.
C) Conservatism holds that strict adherence to accounting principles is not required for items of little significance, whereas materiality requires that financial reporting should neither disproportionately overstate nor understate a situation.
D) Conservatism requires that revenues be measured within the specific reporting period, whereas materiality requires that costs be deducted from the reported revenues to determine the period's net income.

Dunkey · **Reply #1 on:** Jul 6, 2018

Answer to Question 1

D

Answer to Question 2

A
Explanation: A) The conservatism principle requires that financial reporting be conservative, neither disproportionately overstating nor understating a situation. The materiality principle holds that strict adherence to accounting principles is not required for items of little significance.