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Louisiana State University, Shreveport ACCT 701 Chapter 6 Self- Test Indicate whether each of the following statements is true or false

Accounting

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Louisiana State University, Shreveport

ACCT 701

Chapter 6 Self- Test

Indicate whether each of the following statements is true or false.

1)The business entity concept assumes that each business has an existence separate from all parties except its owners.

2. When the substance of a transaction differs from its legal form, the accountant should

record the economic substance.

3. The matching principle is fundamental to the accrual basis of accounting.
4. Exceptions to the realization principle include the installment basis of revenue recognition

for sales revenue and the completed-contract method for long-term construction projects.

5. Immaterial items do not have to be recorded at all.
6. The conceptual framework project resulted in identifying two primary qualitative

characteristics that accounting information should possess—relevance and reliability.