Question 1

An accountant who records revenue when a credit sale is made rather than waiting for the receipt of cash from the customer is

Accepted Answer

A) violating generally accepted accounting principles. 
B) following the accrual principle. 
C) following the conservatism constraint. 
D) following the consistency principle. 
A) violating generally accepted accounting principles. 
B) following the accrual principle. 
C) following the conservatism constraint. 
D) following the consistency principle.

Question 2

Which of the following important types of documents are not issued by the Accounting Standards Executive Committee?

Accepted Answer

A) tax authority guidelines. 
B) statements of position. 
C) practice bulletins. 
D) accounting and auditing guides. 
A) tax authority guidelines. 
B) statements of position. 
C) practice bulletins. 
D) accounting and auditing guides.

Question 3

Assets are carried on the books at historical cost.

Accepted Answer

A) True 
 B)False

Question 4

The Statements of Financial Accounting Standards that automatically become generally accepted accounting principles are issued by

Accepted Answer

A) the SEC. 
B) the AICPA. 
C) the FASB. 
D) the IRS. 
A) the SEC. 
B) the AICPA. 
C) the FASB. 
D) the IRS.

Question 5

Paige Turner Publishing's employees worked the last 3 days of December 2019, that they will not be paid for until January 2020. According to the matching principle, Paige Turner Publishing should recognize the wages expense for the last 3 days of 2019

Accepted Answer

A) in whichever year the management wants to. 
B) half in 2019 and half in 2020. 
C) in 2019 when the employees worked. 
D) in 2020 when they were paid. 
A) in whichever year the management wants to. 
B) half in 2019 and half in 2020. 
C) in 2019 when the employees worked. 
D) in 2020 when they were paid.

Question 6

Holly Day Company purchased a piece of land 10 years ago for $50,000. Holly Day Company is considering selling the land. The piece of land was recently appraised for $120,000, they received an offer from a prospective buyer for $105,000, and a similar piece of land 5 blocks away recently sold for $113,000. How much should Holly Day Company report on its balance sheet for the piece of land?

Accepted Answer

A) $113,000 
B) $105,000 
C) $50,000 
D) $120,000 
A) $113,000 
B) $105,000 
C) $50,000 
D) $120,000

Question 7

If an expenditure that is expected to benefit future periods is made during one accounting period, the cost should be divided and charged as an expense during each period benefited.

Accepted Answer

A) True 
 B)False

Question 8

Hour Place Clock Repair paid $2,580 cash in advance for a one year insurance policy. According to the matching principle, if 3 months of the policy has expired by the end of the current fiscal year, how much should Hour Place Clock Repair report as Insurance Expense on the Income Statement?

Accepted Answer

A) $2,580 
B) $5,805 
C) $215 
D) $645 
A) $2,580 
B) $5,805 
C) $215 
D) $645

Question 9

Because of the modifying constraint of ________, if uncertainty exists, assets are understated rather than overstated.

Accepted Answer

The answer of Because of the modifying constraint of ________,...

Question 10

Assets are recorded at cost when they are purchased, but the asset accounts are adjusted each year to reflect changes in market value.

Accepted Answer

A) True 
 B)False

Question 11

The New York Mets received cash from their season ticket holders for the entire season in advance. Under the revenue recognition principle, the New York Mets should recognize the revenue from the season ticket holders

Accepted Answer

A) at the time the cash is received. 
B) after the season is completed. 
C) as each game is played. 
D) in two equal installments, six months apart. 
A) at the time the cash is received. 
B) after the season is completed. 
C) as each game is played. 
D) in two equal installments, six months apart.

Question 12

An accountant charged the Repairs Expense account for a tool that cost $12. The tool had an estimated useful life of 5 years; however, the accountant chose not to depreciate it. The modifying constraint that the accountant followed was

Accepted Answer

A) industry practice. 
B) materiality. 
C) conservatism. 
D) objectivity. 
A) industry practice. 
B) materiality. 
C) conservatism. 
D) objectivity.

Question 13

The basic financial reports of a business provide users with information about all of the following with the exception of

Accepted Answer

A) claims against the assets (liabilities and owner's equity). 
B) economic resources (assets). 
C) competitors of a business. 
D) profits. 
A) claims against the assets (liabilities and owner's equity). 
B) economic resources (assets). 
C) competitors of a business. 
D) profits.

Question 14

Identify the statement below that is not correct regarding generally accepted accounting principles (GAAP).

Accepted Answer

A) GAAP is used to ensure that financial statements are meaningful and useful. 
B) Sole proprietorships are not required to use GAAP because there is only a single owner. 
C) GAAP allows the financial statements of different companies to be compared and meaningful conclusions drawn from the comparison. 
D) Using generally accepting accounting principles (GAAP)allows companies to compare its own statements from period to period. 
A) GAAP is used to ensure that financial statements are meaningful and useful. 
B) Sole proprietorships are not required to use GAAP because there is only a single owner. 
C) GAAP allows the financial statements of different companies to be compared and meaningful conclusions drawn from the comparison. 
D) Using generally accepting accounting principles (GAAP)allows companies to compare its own statements from period to period.

Question 15

Why are notes important in financial statements and when should they be provided?

Accepted Answer

1. The notes provide integral

Question 16

Paige Turner Publishing receives cash from its subscribers in advance for a one year subscription. Under the revenue recognition principle, Paige Turner Publishing should recognize the revenue from the subscriptions

Accepted Answer

A) in equal installments over the one year subscription period, as it is earned. 
B) at the time the cash is received. 
C) after the one year subscription has expired. 
D) in two equal installments, six months apart. 
A) in equal installments over the one year subscription period, as it is earned. 
B) at the time the cash is received. 
C) after the one year subscription has expired. 
D) in two equal installments, six months apart.

Question 17

Keeping the personal assets of the owner of a business separate from the assets of the firm is an example of

Accepted Answer

A) following the going concern assumption. 
B) applying the conservatism constraint. 
C) following the separate entity assumption. 
D) applying the realization principle. 
A) following the going concern assumption. 
B) applying the conservatism constraint. 
C) following the separate entity assumption. 
D) applying the realization principle.

Question 18

The ________ principle requires important facts that would have an effect on an investor's decisions be included in the financial statements.

Accepted Answer

The answer of The ________ principle requires important facts that...

Question 19

The Garrison Company offers terms of net 30 days for its credit sales, recording the revenue from the sales when the cash is received from the customers. Garrison Company is

Accepted Answer

A) following the conservatism constraint. 
B) violating the revenue recognition principle. 
C) violating the consistency principle. 
D) following the realization principle. 
A) following the conservatism constraint. 
B) violating the revenue recognition principle. 
C) violating the consistency principle. 
D) following the realization principle.

Question 20

The SEC has authority to define accounting terms and to prescribe accounting procedures used by all ________ held corporations.

Accepted Answer

The answer of The SEC has authority to define accounting...

Exam 14: Accounting Principles and Reporting Standards

An accountant who records revenue when a credit sale is made rather than waiting for the receipt of cash from the customer is

Which of the following important types of documents are not issued by the Accounting Standards Executive Committee?

Assets are carried on the books at historical cost.

The Statements of Financial Accounting Standards that automatically become generally accepted accounting principles are issued by

Paige Turner Publishing's employees worked the last 3 days of December 2019, that they will not be paid for until January 2020. According to the matching principle, Paige Turner Publishing should recognize the wages expense for the last 3 days of 2019

If an expenditure that is expected to benefit future periods is made during one accounting period, the cost should be divided and charged as an expense during each period benefited.

Hour Place Clock Repair paid $2,580 cash in advance for a one year insurance policy. According to the matching principle, if 3 months of the policy has expired by the end of the current fiscal year, how much should Hour Place Clock Repair report as Insurance Expense on the Income Statement?

Because of the modifying constraint of ________, if uncertainty exists, assets are understated rather than overstated.

Assets are recorded at cost when they are purchased, but the asset accounts are adjusted each year to reflect changes in market value.

The New York Mets received cash from their season ticket holders for the entire season in advance. Under the revenue recognition principle, the New York Mets should recognize the revenue from the season ticket holders

An accountant charged the Repairs Expense account for a tool that cost $12. The tool had an estimated useful life of 5 years; however, the accountant chose not to depreciate it. The modifying constraint that the accountant followed was

The basic financial reports of a business provide users with information about all of the following with the exception of

Identify the statement below that is not correct regarding generally accepted accounting principles (GAAP).

Why are notes important in financial statements and when should they be provided?

Paige Turner Publishing receives cash from its subscribers in advance for a one year subscription. Under the revenue recognition principle, Paige Turner Publishing should recognize the revenue from the subscriptions

Keeping the personal assets of the owner of a business separate from the assets of the firm is an example of

The ________ principle requires important facts that would have an effect on an investor's decisions be included in the financial statements.

The Garrison Company offers terms of net 30 days for its credit sales, recording the revenue from the sales when the cash is received from the customers. Garrison Company is

The SEC has authority to define accounting terms and to prescribe accounting procedures used by all ________ held corporations.

Accounting: The Language of Business

Analyzing Business Transactions

Analyzing Business Transactions Using T Accounts

The General Journal and the General Ledger

Adjustments and the Worksheet

Closing Entries and Teh Postclosing Trial Balance

Accounting for Sales and Accounts Receivable

Accounting for Purchases and Accounts Payable

Cash Receipts, Cash Payments, and Banking Procedures

Payroll Computations, Records, and Payment

Payroll Taxes, Deposits, and Reports

Accruals, Deferrals, and the Worksheet

Financial Statements and Closing Procedures

Accounts Receivable and Uncollectible Accounts

Notes Payable and Notes Receivable

Merchandise Inventory

Property, Plant, and Equipment

Accounting for Partnerships

Corporations: Formation and Capital Stock Transactions

Corporate Earnings and Capital Transactions

Long-Term Bonds

Financial Statement Analysis

The Statement of Cash Flows

Departmentalized Profit and Cost Centers

Accounting for Manufacturing Activities

Job Order Cost Accounting

Process Cost Accounting

Controlling Manufacturing Costs: Standard Costs

Cost-Revenue Analysis for Decision Making

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