Question 1

The belief that an entity will continue to operate, unless there is evidence to the contrary, is the

Accepted Answer

A)  accounting period concept. 
B)  historical cost principle. 
C)  unit of measurement concept. 
D)  going concern assumption. 
E)  revenue recognition rule. 
A)  accounting period concept. 
B)  historical cost principle. 
C)  unit of measurement concept. 
D)  going concern assumption. 
E)  revenue recognition rule.

Question 2

The accounting system

Accepted Answer

A)  provides a systematic approach to collecting, processing, and communicating financial information to decision makers. 
B)  provides a means for companies to increase the market price of their common stock on the stock exchanges. 
C)  is comprised of T-accounts and financial statements. 
D)  uses a general ledger to record all transactions in chronological order. 
E)  keeps track of all transactions engaged in by a business organization. 
A)  provides a systematic approach to collecting, processing, and communicating financial information to decision makers. 
B)  provides a means for companies to increase the market price of their common stock on the stock exchanges. 
C)  is comprised of T-accounts and financial statements. 
D)  uses a general ledger to record all transactions in chronological order. 
E)  keeps track of all transactions engaged in by a business organization.

Question 3

A share of ownership in a corporation is known as

Accepted Answer

A)  common stock. 
B)  par value. 
C)  additional paid-in capital. 
D)  retained earnings. 
E)  an expense. 
A)  common stock. 
B)  par value. 
C)  additional paid-in capital. 
D)  retained earnings. 
E)  an expense.

Question 4

Lima Co. has received $12,000 for future subscriptions to The Bean Magazine. Lima should record this amount as a(an)

Accepted Answer

A)  long-term investment. 
B)  earned revenue. 
C)  account receivable. 
D)  expense. 
E)  unearned revenue. 
A)  long-term investment. 
B)  earned revenue. 
C)  account receivable. 
D)  expense. 
E)  unearned revenue.

Question 5

The general ledger is considered accounting's book of original entry.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following formulas is correct?

Accepted Answer

A)  Revenues - Gross Profit - Non-Operating Expenses = Net Income 
B)  Gross Profit - Non-Operating Expenses - Income Tax Expense = Net Income 
C)  Revenues - Cost of Goods Sold - Non-Operating Expenses - Income Tax Expense = Net Income 
D)  Revenues - Cost of Goods Sold - Other Operating Expenses - Non-Operating Expenses - Income Tax Expense = Net Income 
E)  Revenues - Unearned Revenues - Cost of Goods Sold - Non-Operating Expenses - Income Tax Expense = Net Income 
A)  Revenues - Gross Profit - Non-Operating Expenses = Net Income 
B)  Gross Profit - Non-Operating Expenses - Income Tax Expense = Net Income 
C)  Revenues - Cost of Goods Sold - Non-Operating Expenses - Income Tax Expense = Net Income 
D)  Revenues - Cost of Goods Sold - Other Operating Expenses - Non-Operating Expenses - Income Tax Expense = Net Income 
E)  Revenues - Unearned Revenues - Cost of Goods Sold - Non-Operating Expenses - Income Tax Expense = Net Income

Question 7

When a share of stock is first sold, the amount received by the company may be different from the amount printed on the stock certificate. Any amount over that printed amount will be recognized in which of the following accounts?

Accepted Answer

A)  Common Stock. 
B)  Retained Earnings 
C)  Revenue from Stock Sales 
D)  Additional Paid-In Capital 
E)  Long-Term Investment 
A)  Common Stock. 
B)  Retained Earnings 
C)  Revenue from Stock Sales 
D)  Additional Paid-In Capital 
E)  Long-Term Investment

Question 8

The use of historical cost may mean that some asset values are significantly understated after those assets are held for a long period of time.

Accepted Answer

A) True 
 B)False

Question 9

On Jan. 2, 2010, Doric Company purchased a machine for $75,000. Doric expects the machine to have a useful life of 10 years and $5,000 salvage value. What is the book value of machine at the end of 2011?

Accepted Answer

A)  $56,000 
B)  $60,000 
C)  $61,000 
D)  $70,000 
E)  $75,000 
A)  $56,000 
B)  $60,000 
C)  $61,000 
D)  $70,000 
E)  $75,000

Question 10

Reliability in accounting indicates the possession by information of which of the following traits?

Accepted Answer

The answer of Reliability in accounting indicates the possession by...

Question 11

The conservatism principle states that accountants should understate asset values and overstate liabilities to provide the most conservative financial statements for a company.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements about relevant accounting information is true?

Accepted Answer

A)  Predictive value helps decision makers confirm or correct earlier expectations. 
B)  Predictive value implies that accounting data should portray the true nature of a business's economic resources, obligations, and transactions. 
C)  Relevant information is provided to decision makers in a time frame that will influence their decisions. 
D)  Feedback value allows a user to forecast future occurrences from a current situation. 
E)  Information that is provided to stockholders within one month of its occurrence would always be considered timely. 
A)  Predictive value helps decision makers confirm or correct earlier expectations. 
B)  Predictive value implies that accounting data should portray the true nature of a business's economic resources, obligations, and transactions. 
C)  Relevant information is provided to decision makers in a time frame that will influence their decisions. 
D)  Feedback value allows a user to forecast future occurrences from a current situation. 
E)  Information that is provided to stockholders within one month of its occurrence would always be considered timely.

Question 13

The concept that states that financial reports should be comprehensible to people who are reasonably perceptive about business and economic activities and are willing to study the information with reasonable diligence is

Accepted Answer

A)  understandability. 
B)  relevance. 
C)  reliability. 
D)  materiality. 
E)  comparability. 
A)  understandability. 
B)  relevance. 
C)  reliability. 
D)  materiality. 
E)  comparability.

Question 14

An internet service provider requires customers to prepay for six months' service. On August 1, 2010 Ricky Roberts paid $480 for internet service for the next six-month period. On August 1, how will the internet service record the amount received from Roberts?

Accepted Answer

A)  Prepaid expense 
B)  Unearned revenue 
C)  Accrued revenue 
D)  Earned revenue 
E)  Long-term liability 
A)  Prepaid expense 
B)  Unearned revenue 
C)  Accrued revenue 
D)  Earned revenue 
E)  Long-term liability

Question 15

A chart of accounts is

Accepted Answer

A)  a T-account containing all business assets. 
B)  a numerical listing of all the accounts of a business. 
C)  prepared from the transactions in the general journal. 
D)  the same accounting document as the general ledger. 
E)  the listing of the financial statements that must be prepared by a business. 
A)  a T-account containing all business assets. 
B)  a numerical listing of all the accounts of a business. 
C)  prepared from the transactions in the general journal. 
D)  the same accounting document as the general ledger. 
E)  the listing of the financial statements that must be prepared by a business.

Question 16

The requirement for publicly owned companies to issue quarterly and annual financial statements is mandated by the

Accepted Answer

A)  Securities and Exchange Commission. 
B)  Financial Accounting Standards Board. 
C)  New York Stock Exchange. 
D)  Internal Revenue Service. 
E)  American Institute of CPAs. 
A)  Securities and Exchange Commission. 
B)  Financial Accounting Standards Board. 
C)  New York Stock Exchange. 
D)  Internal Revenue Service. 
E)  American Institute of CPAs.

Question 17

Significant related party transactions in which a business engages should be reported in a company's financial statements.

Accepted Answer

A) True 
 B)False

Question 18

Match each term listed below with the appropriate term. Terms may be used once, more than once, or not at all.
-_____	Is verifiable, neutral, and representionally faithful.

Accepted Answer

A)  Accounting Period 
B)  Comparability 
C)  Expense Recognition Rules 
D)  Feedback Value 
E)  Full Disclosure
F) Going Concern
G) Historical Cost
H) Neutrality
I) Predictive Value
J) Relevance
K) Reliability
L) Representational Faithfulness
M) Revenue Recognition Rules
N) Verifiability 
A)  Accounting Period 
B)  Comparability 
C)  Expense Recognition Rules 
D)  Feedback Value 
E)  Full Disclosure
F) Going Concern
G) Historical Cost
H) Neutrality
I) Predictive Value
J) Relevance
K) Reliability
L) Representational Faithfulness
M) Revenue Recognition Rules
N) Verifiability

Question 19

Tipple Co. is located in southern Mississippi and the property value of the company's headquarters was reduced after a hurricane uprooted all the trees and caused significant erosion. Tipple Co. should

Accepted Answer

A)  nake no adjustments to its financial statements because of the historical cost principle. 
B)  nake no adjustments to its financial statements but provide full disclosure of the incident in the footnotes. 
C)  write up the property value for the planting of new trees based on the going concern principle. 
D)  write down the property value to fair market value based on the matching principle. 
E)  write down the property value to fair market value based on the conservatism principle. 
A)  nake no adjustments to its financial statements because of the historical cost principle. 
B)  nake no adjustments to its financial statements but provide full disclosure of the incident in the footnotes. 
C)  write up the property value for the planting of new trees based on the going concern principle. 
D)  write down the property value to fair market value based on the matching principle. 
E)  write down the property value to fair market value based on the conservatism principle.

Question 20

A current asset must
I. be easily converted into cash.
II. have future economic benefit.
III. be used up or converted into cash within the next year or operating cycle, whichever is shorter.

Accepted Answer

A)  I is true. 
B)  I and II are true. 
C)  II and III are true. 
D)  I and III are true. 
E)  I, II, and III are true. 
A)  I is true. 
B)  I and II are true. 
C)  II and III are true. 
D)  I and III are true. 
E)  I, II, and III are true.

The belief that an entity will continue to operate, unless there is evidence to the contrary, is the

The accounting system

A share of ownership in a corporation is known as

Lima Co. has received $12,000 for future subscriptions to The Bean Magazine. Lima should record this amount as a(an)

The general ledger is considered accounting's book of original entry.

Which of the following formulas is correct?

When a share of stock is first sold, the amount received by the company may be different from the amount printed on the stock certificate. Any amount over that printed amount will be recognized in which of the following accounts?

The use of historical cost may mean that some asset values are significantly understated after those assets are held for a long period of time.

On Jan. 2, 2010, Doric Company purchased a machine for $75,000. Doric expects the machine to have a useful life of 10 years and $5,000 salvage value. What is the book value of machine at the end of 2011?

Reliability in accounting indicates the possession by information of which of the following traits?

The conservatism principle states that accountants should understate asset values and overstate liabilities to provide the most conservative financial statements for a company.

Which of the following statements about relevant accounting information is true?

The concept that states that financial reports should be comprehensible to people who are reasonably perceptive about business and economic activities and are willing to study the information with reasonable diligence is

An internet service provider requires customers to prepay for six months' service. On August 1, 2010 Ricky Roberts paid $480 for internet service for the next six-month period. On August 1, how will the internet service record the amount received from Roberts?

A chart of accounts is

The requirement for publicly owned companies to issue quarterly and annual financial statements is mandated by the

Significant related party transactions in which a business engages should be reported in a company's financial statements.

Match each term listed below with the appropriate term. Terms may be used once, more than once, or not at all. -_____ Is verifiable, neutral, and representionally faithful.

Tipple Co. is located in southern Mississippi and the property value of the company's headquarters was reduced after a hurricane uprooted all the trees and caused significant erosion. Tipple Co. should

A current asset must I. be easily converted into cash. II. have future economic benefit. III. be used up or converted into cash within the next year or operating cycle, whichever is shorter.

An Introduction to the Role of Accounting in the Business World

The Mechanics of Double-Entry Bookkeeping

Cash, Short-Term Investments and Accounts Receivable

Inventory

Long-Term Assets: Property, Plant Equipment and Intangibles

Liabilities

Stockholders Equity

The Corporate Income Statement and Financial Analysis

Statement of Cash Flows

Managerial Accounting

Cost-Volume-Profit Analysis

The Master Budget

Activity-Based Management and Performance Measurementreward

Filters

Exam 2: Concepts and Elements Underlying Accounting

The belief that an entity will continue to operate, unless there is evidence to the contrary, is the

The accounting system

A share of ownership in a corporation is known as

Lima Co. has received $12,000 for future subscriptions to The Bean Magazine. Lima should record this amount as a(an)

The general ledger is considered accounting's book of original entry.

Which of the following formulas is correct?

When a share of stock is first sold, the amount received by the company may be different from the amount printed on the stock certificate. Any amount over that printed amount will be recognized in which of the following accounts?

The use of historical cost may mean that some asset values are significantly understated after those assets are held for a long period of time.

On Jan. 2, 2010, Doric Company purchased a machine for $75,000. Doric expects the machine to have a useful life of 10 years and $5,000 salvage value. What is the book value of machine at the end of 2011?

Reliability in accounting indicates the possession by information of which of the following traits?

The conservatism principle states that accountants should understate asset values and overstate liabilities to provide the most conservative financial statements for a company.

Which of the following statements about relevant accounting information is true?

The concept that states that financial reports should be comprehensible to people who are reasonably perceptive about business and economic activities and are willing to study the information with reasonable diligence is

An internet service provider requires customers to prepay for six months' service. On August 1, 2010 Ricky Roberts paid $480 for internet service for the next six-month period. On August 1, how will the internet service record the amount received from Roberts?

A chart of accounts is

The requirement for publicly owned companies to issue quarterly and annual financial statements is mandated by the

Significant related party transactions in which a business engages should be reported in a company's financial statements.

Match each term listed below with the appropriate term. Terms may be used once, more than once, or not at all. -_____ Is verifiable, neutral, and representionally faithful.

Tipple Co. is located in southern Mississippi and the property value of the company's headquarters was reduced after a hurricane uprooted all the trees and caused significant erosion. Tipple Co. should

A current asset must I. be easily converted into cash. II. have future economic benefit. III. be used up or converted into cash within the next year or operating cycle, whichever is shorter.

An Introduction to the Role of Accounting in the Business World

The Mechanics of Double-Entry Bookkeeping

Cash, Short-Term Investments and Accounts Receivable

Inventory

Long-Term Assets: Property, Plant Equipment and Intangibles

Liabilities

Stockholders Equity

The Corporate Income Statement and Financial Analysis

Statement of Cash Flows

Managerial Accounting

Cost-Volume-Profit Analysis

The Master Budget

Activity-Based Management and Performance Measurementreward

Filters