An Entity Where It Is Reasonable to Expect the Existence

question 5

Multiple Choice

An entity where it is reasonable to expect the existence of users dependant on general- purpose financial reports for information to use in economic decision making is known as a:

• A) public company.
• B) large business.
• C) reporting entity.
• D) non-reporting entity.

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Definitions:

Revenue Recognition Principle

An accounting principle that stipulates revenue should be recognized and recorded when it is earned, regardless of when the cash is received.

Business Entity Principle

An accounting concept that treats a business as separate and distinct from its owners for purposes of recording financial transactions.

Monetary Unit Principle

An accounting principle that assumes business transactions or events can be measured and expressed in monetary units.

Generally Accepted Accounting Principles

A set of widely adhered to accounting principles and norms for the preparation of financial statements.