question

Factors that shape an accounting information system include the: A. volume of data to be handled. B. transactions in which the business engages. C. all of these answer choices are correct. D. informational demands of management.

answer

C

question

Which of the following is not transferred to Retained Earnings at the end of the period? A. Dividends. B. Common stock. C. Revenues. D. Expenses.

answer

B

question

When a corporation purchases a computer for cash, A. liabilities increase. B. stockholders' equity decreases. C. the account Cash will be credited. D. assets increase.

answer

C

question

A trial balance A. proves that debits and credits are equal in the ledger. B. chronologically lists transactions and other events. C. proves that a company recorded all transactions. D. All of these answer choices are correct.

answer

A

question

Depreciation allocates the cost of long-lived assets to expense over the periods which benefit from their use (useful life). T or F

answer

T

question

The adjusting entry to record an accrued expense includes a debit to: A. an expense account and a credit to a revenue account. B. an expense account and a credit to a liability account. C. a liability account and a credit to an expense account. D. a liability account and a credit to a revenue account.

answer

B

question

After journalizing and posting all adjusting entries, a company prepares an adjusted trial balance that is the primary basis for preparation of the financial statements. T or F

answer

T

question

All of the following statements about contra asset accounts are true except: A. Contra asset accounts have normal credit balances. B. Contra asset accounts are increased with credits. C. Contra asset accounts are deducted from the related asset account to determine book value. D. Contra asset accounts are not reported in the financial statements.

answer

D

question

In the closing process, all of the revenue and expense account balances are closed to the: A. Dividends account. B. Capital account. C. Income Summary account. D. Retained Earnings account.

answer

C

question

If the balances in both accounts receivable and accounts payable decrease during the year A. the decrease in both the accounts receivable and accounts payable balances will result in an increase in cash for the period. B. the decrease in both the accounts receivable and accounts payable balances will result in a decrease in cash for the period. C. the decrease in the accounts receivable balance would result in an increase in cash for the period. D. the decrease in the accounts payable balance would result in an increase in cash for the period.

answer

C

question

Which of the following columns is generally found on a worksheet? A. Chart of accounts. B. Statement of cash flows. C. Income statement. D. All of these answer choices are correct.

answer

C

question

Companies may prepare a trial balance at any time. T or F

answer

T

question

Which of the following is an incorrect depiction of the accounting equation? A. Assets + Stockholder's Equity = Liabilities. B. Assets = Liabilities + Stockholders' Equity. C. Assets - Stockholders' Equity = Liabilities. D. Assets - Liabilities = Stockholders' Equity.

answer

A

question

When a dividend is declared: A. assets decrease. B. liabilities increase. C. stockholders' equity increases. D. all of these answer choices are correct

answer

B

question

Which of the following statements about a trial balance is incorrect? A. It uncovers errors in journalizing and posting. B. It is useful in the preparation of financial statements. C. It proves that all transactions have been recorded. D. Its primary purpose is to prove the mathematical equality of debits and credits after posting.

answer

C

question

Which of the following is a reason the trial balance may not contain up-to-date and complete data? A. Some items may be unrecorded. B. Some costs are not recorded during the accounting period because these costs expire with the passage of time rather than as a result of recurring daily transactions. C. Some events are not recorded daily because it's not efficient to do so. D. All of these answer choices are correct.

answer

D

question

Unearned revenues are: A. revenues. B. liabilities. C. accruals. D. all of these answer choices are correct.

answer

B

question

An accrued expense is A. an expense for which cash is paid before the expense is incurred. B. an expense that has been incurred but for which payment has not yet been made. C. initially recorded as an asset. D. an expense which is recorded with the passage of time.

answer

B

question

The proper sequence of financial statement preparation is: A. The Retained Earnings Statement, the Balance Sheet, the Income Statement, and then the Statement of Cash Flows. B. The Balance Sheet, the Retained Earnings Statement, the Income Statement, and then the Statement of Cash Flows. C. The Income Statement, the Retained Earnings Statement, the Balance Sheet, and then the Statement of Cash Flows. D. The Statement of Cash Flows, the Income Statement, the Retained Earnings Statement, and then the Balance Sheet.

answer

C

question

If the entry to close Income Summary to Retained Earnings includes a debit to Income Summary: A. The company has incurred a net loss. B. Expenses exceed revenues. C. Retained Earnings will be increased by the current period's net income. D. Dividends paid exceed the net income earned for the period.

answer

C

question

To convert cash receipts from customers to revenue on an accrual basis, which of the following adjustments is necessary? A. Add ending Accounts Receivable. B. Subtract ending Unearned Service Revenue. C. Subtract beginning Accounts Receivable. D. All of these answer choices are correct.

answer

D

question

The worksheet: A. replaces the financial statements. B. is prepared at the beginning of the period to ready the permanent accounts for the activity that will occur during the period. C. must be prepared on columnar paper. D. none of these answer choices are correct.

answer

D

question

Double-entry accounting system is the basis of accounting systems under A. GAAP only. B. IFRS only. C. both GAAP and IFRS. D. neither GAAP nor IFRS.

answer

C

question

The statement of retained earnings is one of the financial statements most frequently provided by public companies. T or F

answer

F

question

Which of the following generally provides a better indication of an enterprise's present and continuing ability to generate favorable cash flows? A. Accrual basis accounting. B. Managerial basis accounting. C. Financial basis accounting. D. Cash basis accounting.

answer

A

question

The role of the Securities and Exchange Commission (SEC) in the formulation of accounting standards can be best described as A. it develops all accounting standards by itself. B. varied - the SEC relies on FASB to develop standards but gives advice and recommendations to the private sector as needed. C. non-existent. D. it allows the FASB to develop all accounting standards by itself.

answer

B

question

The first step taken in the establishment of a typical FASB statement is: A. the board evaluates the research and public response and issues an exposure draft. B. the board Evaluates responses and changes exposure draft if necessary. Final standard is issued. C. topics are identified and placed on the board's agenda. D. a public hearing on the proposed standard is held.

answer

C

question

An effective capital allocation process A. promotes productivity. B. encourages innovation. C. provides an efficient market for buying and selling securities. D. all of these choices are correct.

answer

D

question

Which of the following would result if there was not set of generally accepted and universally practiced accounting standards? A. It would be almost impossible to prepare statements that could be compared. B. Each company would have to develop its own standards. C. Readers of financial statements would have to familiarize themselves with every company's peculiar accounting and reporting practices. D. All of these answer choices are correct.

answer

D

question

The Financial Accounting Standards Advisory Council (FASAC) consults with the FASB on major policy and technical issues and helps select task force members. T or F

answer

T

question

Which of the following is not a significant difference between the FASB (Financial Accounting Standards Board) and its predecessor, the APB? A. Larger membership. B. Increased independence. C. Greater autonomy. D. Broader representation.

answer

A

question

A conceptual framework establishes the concepts that provide guidance on A. all of these answer choices are correct. B. identifying the boundaries of financial reporting. C. selecting the transactions, other events, and circumstances to be represented, D. how transactions, events and circumstances should be recognized and measured.

answer

A

question

Which of the following statements is true regarding the conceptual frameworks developed by FASB and IASB? A. Both have similar measurement principles based on historical cost and fair value. B. The existing conceptual frameworks underlying U.S. GAAP and IFRS are quite dissimilar. C. The monetary unit assumption is part of each framework and the U.S. dollar will be the established as the common unit of currency. D. The economic entity assumption is not part of the framework due to cultural differences.

answer

A

question

The objective of general-purpose financial reporting in the conceptual framework is A. understandability. B. reliability. C. comparability. D. decision usefulness.

answer

D

question

Which of the following is not among the ingredients of the fundamental quality of faithful representation? A. completeness. B. materiality. C. neutrality. D. free from error.

answer

B

question

Enhancing qualities of accounting information include all of the following except: A. comparability. B. understandability. C. neutrality. D. timeliness.

answer

C

question

The change in equity (net assets) of an entity during a period from transactions and other events and circumstances from non-owner sources is called A. comprehensive income. B. gains. C. revenues. D. net income.

answer

A

question

In the United States, inflation/deflation is ignored in accounting under which of the following assumptions? A. Going concern assumption. B. Time period assumption. C. Monetary unit assumption. D. Periodicity assumption.

answer

C

question

Depreciation and amortization policies are justifiable and appropriate only if we assume some permanence to the company because of the: A. economic entity assumption. B. going concern assumption. C. monetary unit assumption. D. periodicity assumption.

answer

B

question

Generally, revenues are recognized when the: A. product is produced. B. cash is received. C. All of these answer choices are correct. D. performance obligation is satisfied.

answer

D

question

The difficulty in cost-benefit analysis is that the benefits are usually evident and easily measurable, while the costs are not always evident or measurable. T or F

answer

F

question

Both GAAP and IFRS are increasing the use of fair value to report assets, but at this point GAAP has adopted it more broadly. T or F

answer

F

question

Which level of the conceptual framework is devoted to elements of financial statements and the qualitative characteristics? A. 3rd B. 2nd C. 4th D. 1st

answer

B

question

The conceptual framework contains how many Statements of Financial Accounting Concepts that relate to financial reporting for business enterprises? A. 5 B. 6 C. 4 D. 7

answer

D

question

When a company changes accounting principles, it financial statements lack ______________. A. consistency B. confirmatory value C. predictive value D. faithful representation

answer

A

question

Information that has been measured and reported in a similar manner for different enterprises is considered consistent. T or F

answer

F

question

Companies and their auditors generally have adopted a rule of thumb that anything under _____ of net income is considered not material. A. 10% B. 15% C. 5% D. 2%

answer

C

question

Preparation of merged financial statements when a parent-subsidiary relationship exists does not violate the A. economic entity assumption. B. neutrality characteristic. C. relevance characteristic. D. comparability characteristic.

answer

A

question

To be recognized in the main body of financial statements, an item should A. meet the definition of a basic element. B. be relevant and reliable. C. be measurable with sufficient certainty. D. all of these answer choices are correct.

answer

D

question

With regard to fair value, which of the following measurements is considered the least subjective? A. Observable inputs that reflect quoted prices for identical assets or liabilities. B. Inputs that are observable either directly or through corroboration with observable data. C. For purposes of fair value, all of the measures are considered equally subjective. D. Unobservable inputs.

answer

A

question

In 2010, the FASB and IASB agreed on A. the constraints of financial reporting. B. all of these answer choices are correct. C. a common set of elements for financial statements. D. the objective of financial reporting and a common set of desired qualitative characteristics.

answer

D

ACG3131 Practice Quiz exam 1

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