Question 1

In accounting, the concept for whether information is presented the same way by different companies is

Accepted Answer

A)  Timeliness 
B)  Representational faithfulness 
C)  Understandability 
D)  Comparability 
A)  Timeliness 
B)  Representational faithfulness 
C)  Understandability 
D)  Comparability

Question 2

A company has borrowed money from a bank. Under the FASB's system, the amount of money the company owes to the bank at the end of the year is an example of an expense.

Accepted Answer

A) True 
 B)False

Question 3

A ""deferred revenue"" is an example of a liability.

Accepted Answer

A) True 
 B)False

Question 4

Expenses and losses are different because expenses are related to the main operating activities of the entity, but losses relate to peripheral or incidental activities.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not one of the basic categories or "elements" that accountants use to classify information in financial statements?

Accepted Answer

A)  Assets 
B)  Distributions to owners 
C)  Revenues 
D)  Taxes 
A)  Assets 
B)  Distributions to owners 
C)  Revenues 
D)  Taxes

Question 6

Which of the following is one of the basic categories or "elements" that accountants use to classify information in financial statements?

Accepted Answer

A)  Liabilities 
B)  Receipts 
C)  Dsibursements 
D)  Rent 
A)  Liabilities 
B)  Receipts 
C)  Dsibursements 
D)  Rent

Question 7

Assume that a company obtains legal services from its lawyer, worth $1,000, but has not yet paid for those services when the accounting period ends. Under accrual accounting, the books should reflect

Accepted Answer

A)  An asset of $1,000 and a revenue of $,1000 
B)  A revenue of $1,000 and an expense of $1,000 
C)  Nothing, since the lawyer has not yet been paid 
D)  A liability of $1,000 and an expense of $1,000 
A)  An asset of $1,000 and a revenue of $,1000 
B)  A revenue of $1,000 and an expense of $1,000 
C)  Nothing, since the lawyer has not yet been paid 
D)  A liability of $1,000 and an expense of $1,000

Question 8

The financial accounting "element" that best describes a car owned by a company is

Accepted Answer

A)  Assets 
B)  Liability 
C)  Equity 
D)  Expense 
E)  Revenue 
A)  Assets 
B)  Liability 
C)  Equity 
D)  Expense 
E)  Revenue

Question 9

In accrual accounting, there are situations when a company has received cash from customers but the company can not yet recognize the revenue as earned.

Accepted Answer

A) True 
 B)False

Question 10

David's Loan loaned $2,000,000 to a customer on July 1, 2016, with an interest rate of 6% per year. No interest is scheduled to be paid until the loan is due, on June 30, 2017. The customer has not paid any interest yet. What adjustment, if any, is needed by the bank on December 31, 2016?

Accepted Answer

A)  An increase in cash of $60,000 and an increase in equity and interest revenue of $60,000 
B)  An increase in interest receivable of $60,000 and an increase in equity and interest revenue of $60,000 
C)  An increase in interest receivable of $120,000 and an increase in equity and interest revenue of $120,000 
D)  No adjustment is needed 
A)  An increase in cash of $60,000 and an increase in equity and interest revenue of $60,000 
B)  An increase in interest receivable of $60,000 and an increase in equity and interest revenue of $60,000 
C)  An increase in interest receivable of $120,000 and an increase in equity and interest revenue of $120,000 
D)  No adjustment is needed

Question 11

Investments by owners, and distributions to owners, are examples of ""reciprocal"" transactions.

Accepted Answer

A) True 
 B)False

Question 12

For something to be ""relevant,"" according to the FASB, it must

Accepted Answer

A)  Be immaterial 
B)  Have either predictive or feedback value 
C)  Be unbiased 
D)  Be easily understood 
A)  Be immaterial 
B)  Have either predictive or feedback value 
C)  Be unbiased 
D)  Be easily understood

Question 13

Which of the following types of transaction will result in an accounting entry that will not change the recorded equity of a company?

Accepted Answer

A)  Paying cash for new inventory 
B)  Paying for the current month's rent expense 
C)  Paying dividends to the owners 
D)  Paying the principal amount due on a bank loan 
A)  Paying cash for new inventory 
B)  Paying for the current month's rent expense 
C)  Paying dividends to the owners 
D)  Paying the principal amount due on a bank loan

Question 14

For the FASB, one of the primary desirable characteristics of accounting information is "representational faithfulness."

Accepted Answer

A) True 
 B)False

Question 15

The organization that sets financial accounting standards for private companies in the U.S. is the Public Company Accounting Oversight Board.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following types of transaction will result in an accounting entry that will increase the recorded equity of a medical insurance company?

Accepted Answer

A)  Paying wages of employees for the month 
B)  Borrowing money from a bank 
C)  Paying dividends to the owners 
D)  Charging medical premiums to people who have signed up to be insured 
A)  Paying wages of employees for the month 
B)  Borrowing money from a bank 
C)  Paying dividends to the owners 
D)  Charging medical premiums to people who have signed up to be insured

Question 17

Dividends to owners reduce a company's comprehensive income for the year.

Accepted Answer

A) True 
 B)False

Question 18

The term net income is defined as being all the changes in owners' equity during a period of time that do not result from transactions with shareholders.

Accepted Answer

A) True 
 B)False

Question 19

The idea in accounting that a business will continue in operations is the

Accepted Answer

A)  Periodicity assumption 
B)  Realization principle 
C)  Going concern assumption 
D)  Matching principle 
A)  Periodicity assumption 
B)  Realization principle 
C)  Going concern assumption 
D)  Matching principle

Question 20

In order for a liability to be recorded under generally accepted accounting principles, the liability must be legally enforceable.

Accepted Answer

A) True 
 B)False

In accounting, the concept for whether information is presented the same way by different companies is

A company has borrowed money from a bank. Under the FASB's system, the amount of money the company owes to the bank at the end of the year is an example of an expense.

A ""deferred revenue"" is an example of a liability.

Expenses and losses are different because expenses are related to the main operating activities of the entity, but losses relate to peripheral or incidental activities.

Which of the following is not one of the basic categories or "elements" that accountants use to classify information in financial statements?

Which of the following is one of the basic categories or "elements" that accountants use to classify information in financial statements?

Assume that a company obtains legal services from its lawyer, worth $1,000, but has not yet paid for those services when the accounting period ends. Under accrual accounting, the books should reflect

The financial accounting "element" that best describes a car owned by a company is

In accrual accounting, there are situations when a company has received cash from customers but the company can not yet recognize the revenue as earned.

David's Loan loaned $2,000,000 to a customer on July 1, 2016, with an interest rate of 6% per year. No interest is scheduled to be paid until the loan is due, on June 30, 2017. The customer has not paid any interest yet. What adjustment, if any, is needed by the bank on December 31, 2016?

Investments by owners, and distributions to owners, are examples of ""reciprocal"" transactions.

For something to be ""relevant,"" according to the FASB, it must

Which of the following types of transaction will result in an accounting entry that will not change the recorded equity of a company?

For the FASB, one of the primary desirable characteristics of accounting information is "representational faithfulness."

The organization that sets financial accounting standards for private companies in the U.S. is the Public Company Accounting Oversight Board.

Which of the following types of transaction will result in an accounting entry that will increase the recorded equity of a medical insurance company?

Dividends to owners reduce a company's comprehensive income for the year.

The term net income is defined as being all the changes in owners' equity during a period of time that do not result from transactions with shareholders.

The idea in accounting that a business will continue in operations is the

In order for a liability to be recorded under generally accepted accounting principles, the liability must be legally enforceable.

How Accounting Works

Choosing Accounting Software

Managing Your Accounts

Accounting for Inventory

Doing Business Day to Day

Tackling the General Ledger

Reconciling Bank and Credit Card Statements

Setting up New Team Members

Understanding Insurance

Other Benefits and Reimbursements

Payroll Taxes

Appendix

Filters

Exam 2: Selecting Your Business Structure

In accounting, the concept for whether information is presented the same way by different companies is

A company has borrowed money from a bank. Under the FASB's system, the amount of money the company owes to the bank at the end of the year is an example of an expense.

A ""deferred revenue"" is an example of a liability.

Expenses and losses are different because expenses are related to the main operating activities of the entity, but losses relate to peripheral or incidental activities.

Which of the following is not one of the basic categories or "elements" that accountants use to classify information in financial statements?

Which of the following is one of the basic categories or "elements" that accountants use to classify information in financial statements?

Assume that a company obtains legal services from its lawyer, worth $1,000, but has not yet paid for those services when the accounting period ends. Under accrual accounting, the books should reflect

The financial accounting "element" that best describes a car owned by a company is

In accrual accounting, there are situations when a company has received cash from customers but the company can not yet recognize the revenue as earned.

David's Loan loaned $2,000,000 to a customer on July 1, 2016, with an interest rate of 6% per year. No interest is scheduled to be paid until the loan is due, on June 30, 2017. The customer has not paid any interest yet. What adjustment, if any, is needed by the bank on December 31, 2016?

Investments by owners, and distributions to owners, are examples of ""reciprocal"" transactions.

For something to be ""relevant,"" according to the FASB, it must

Which of the following types of transaction will result in an accounting entry that will not change the recorded equity of a company?

For the FASB, one of the primary desirable characteristics of accounting information is "representational faithfulness."

The organization that sets financial accounting standards for private companies in the U.S. is the Public Company Accounting Oversight Board.

Which of the following types of transaction will result in an accounting entry that will increase the recorded equity of a medical insurance company?

Dividends to owners reduce a company's comprehensive income for the year.

The term net income is defined as being all the changes in owners' equity during a period of time that do not result from transactions with shareholders.

The idea in accounting that a business will continue in operations is the

In order for a liability to be recorded under generally accepted accounting principles, the liability must be legally enforceable.

How Accounting Works

Choosing Accounting Software

Managing Your Accounts

Accounting for Inventory

Doing Business Day to Day

Tackling the General Ledger

Reconciling Bank and Credit Card Statements

Setting up New Team Members

Understanding Insurance

Other Benefits and Reimbursements

Payroll Taxes

Appendix

Filters