Exam 14: Accounting Principles and Reporting Standards

For convenience, accountants assume that the value of money is stable or that changes in its value are not great enough to affect the recorded financial data.

(True/False)

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Question 41

The Garrison Company offers terms of net 30 days for its credit sales. It records the revenue from these sales as soon as the sales are made rather than waiting until cash is received from the customers. This is an example of the

(Multiple Choice)

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Question 42

Paige Turner Publishing paid cash in advance for a one year insurance policy. According to the matching principle, Paige Turner Publishing should recognize the policy as insurance expense

(Multiple Choice)

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Question 43

Footnotes to financial statements are used to disclose information that may influence investor decisions.

(True/False)

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Question 44

The SEC's 2003 report to the Congress on "principles-based" accounting observed that the first characteristic of objectives-based standards, as dictated by the Sarbanes-Oxley Act, is that any standard must be based on

(Multiple Choice)

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Question 45

When Tamar Snyder opened a shoe store, her accountant did not include the cash in her personal savings account as one of the assets of the business. This is an example of

(Multiple Choice)

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Question 46

Match the descriptions by entering the proper letter in the space provided with the qualitative characteristics of accounting information.

This qualitative characteristic means that accounting information is capable of making a difference in a decision by the report user.

Comparability

This qualitative characteristic is indicated when independent measurers obtain similar results.

Reliability

Often referred to as objectivity; it is the idea that the financial statements are not prepared in a way to favor one group of users (management, owners, creditors, employees, etc.)over other groups.

Timeliness

Correct Answer:

Verified

This qualitative characteristic means that accounting information is capable of making a difference in a decision by the report user.

This qualitative characteristic is indicated when independent measurers obtain similar results.

Often referred to as objectivity; it is the idea that the financial statements are not prepared in a way to favor one group of users (management, owners, creditors, employees, etc.)over other groups.

Information that helps the statement user confirm fulfillment or no fulfillment of prior expectations or decisions is said to have this qualitative characteristic.

This is the concept that data shown in the financial reports reflect what really happened.

Information that is presented soon enough after events are reported to be useful in decision making would meet this qualitative characteristic.

When the financial data is presented in such a manner that it can be meaningfully compared with the same data for other companies, it meets this qualitative characteristic.financial data is presented in such a manner that it can be meaningfully compared with the same data for other companies, it meets this qualitative characteristic.

This qualitative characteristic means simply that the information should be dependable; such information is verifiable, is a faithful representation of the company's financial affairs, and is reasonably free of error and bias.

If information is relevant, it will have this qualitative characteristic and enable statement users in making predictions about the meaning and ultimate outcome of events giving rise to the information.

If an entity uses the same accounting treatment for similar events and data from period to period, this qualitative characteristic is being met.

(Matching)

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Question 47

The Cervantes Company uses the same method of depreciation for its equipment in each fiscal period. This practice is an example of

(Multiple Choice)

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Question 48

What is meant by the concept of neutrality in accounting?

(Essay)

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Question 49

The process used by FASB in developing conceptual framework statements reflects deductive reasoning and involves which steps?

(Essay)

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Question 50

Hour Place Clock Repair paid $2,400 cash in advance for a six month advertising contract with the local newspaper. According to the matching principle, if 2 months of the contract has expired by the end of the current fiscal year, how much should Hour Place Clock Repair report as Advertising Expense on the Income Statement?

(Multiple Choice)

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Question 51

Which of the following statements is NOT true?

(Multiple Choice)

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Question 52

The accounting assumption that the financial statements of a business reflect the activities of the business and not the activities of the owners is the:

(Multiple Choice)

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Question 53

Define the two aspects of the monetary unit assumption.

(Essay)

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Question 54

A deviation from generally accepted accounting principles is

(Multiple Choice)

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Question 55

The cost-benefit test constraint refers to:

(Multiple Choice)

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Question 56

Which of the following statements is correct?

(Multiple Choice)

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Question 57

Depreciating equipment over its useful life is an example of

(Multiple Choice)

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Question 58

In recent years, it has been reported that several large companies have manipulated business transactions and accounting records to change the net income reported on their income statements. Suggest five concepts, assumptions, principles, or conventions that such manipulation would violate.

(Essay)

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Question 59

The separate entity assumption permits businesses to record property and equipment as assets that will provide benefits in future periods.

(True/False)

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Question 60

Showing 41 - 60 of 95

Exam 14: Accounting Principles and Reporting Standards

For convenience, accountants assume that the value of money is stable or that changes in its value are not great enough to affect the recorded financial data.

The Garrison Company offers terms of net 30 days for its credit sales. It records the revenue from these sales as soon as the sales are made rather than waiting until cash is received from the customers. This is an example of the

Paige Turner Publishing paid cash in advance for a one year insurance policy. According to the matching principle, Paige Turner Publishing should recognize the policy as insurance expense

Footnotes to financial statements are used to disclose information that may influence investor decisions.

The SEC's 2003 report to the Congress on "principles-based" accounting observed that the first characteristic of objectives-based standards, as dictated by the Sarbanes-Oxley Act, is that any standard must be based on

When Tamar Snyder opened a shoe store, her accountant did not include the cash in her personal savings account as one of the assets of the business. This is an example of

The Cervantes Company uses the same method of depreciation for its equipment in each fiscal period. This practice is an example of

What is meant by the concept of neutrality in accounting?

The process used by FASB in developing conceptual framework statements reflects deductive reasoning and involves which steps?

Which of the following statements is NOT true?

The accounting assumption that the financial statements of a business reflect the activities of the business and not the activities of the owners is the:

Define the two aspects of the monetary unit assumption.

A deviation from generally accepted accounting principles is

The cost-benefit test constraint refers to:

Which of the following statements is correct?

Depreciating equipment over its useful life is an example of

In recent years, it has been reported that several large companies have manipulated business transactions and accounting records to change the net income reported on their income statements. Suggest five concepts, assumptions, principles, or conventions that such manipulation would violate.

The separate entity assumption permits businesses to record property and equipment as assets that will provide benefits in future periods.

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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