Question 1

If a company has gone bankrupt, its financial statements likely violate:

Accepted Answer

A)  The matching principle.
B)  The realization principle.
C)  The stable monetary unit assumption.
D)  The going concern assumption.E) A) and B)
F) A) and C)

Question 2

The SEC issues accounting standards in the form of:

Accepted Answer

A)  Accounting Research Bulletins.
B)  Financial Reporting Releases.
C)  Financial Accounting Standards.
D)  Financial Technical Bulletins.E) All of the above
F) C) and D)

Question 3

The FASB's conceptual framework's qualitative characteristics of accounting information include:

Accepted Answer

A)  Full disclosure.
B)  Relevance.
C)  Going concern.
D)  Historical cost.E) A) and B)
F) None of the above

Question 4

Comprehensive income is another term for net income.

Accepted Answer

A) True 
 B)False

Question 5

Identify or define the following terms: a. periodicity, b. monetary unit.

Accepted Answer

Periodicity - The life of a company can ...

Question 6

Recognizing expected losses immediately, but deferring expected gains, is an example of:

Accepted Answer

A)  Materiality.
B)  Conservatism.
C)  Cost effectiveness.
D)  Timeliness.E) B) and D)
F) C) and D)

Question 7

Which of the following has the authority to set accounting standards in the United States?

Accepted Answer

A)  FASB
B)  IRS
C)  SEC
D)  AICPAE) A) and B)
F) A) and C)

Question 8

Net income equals:

Accepted Answer

A)  Assets minus liabilities.
B)  Revenues minus cost of goods sold.
C)  Revenues minus expenses.
D)  Cash receipts minus cash payments.E) B) and C)
F) C) and D)

Question 9

The full disclosure principle requires a balance between:

Accepted Answer

A)  Comparability and consistency.
B)  Relevance and cost effectiveness.
C)  Reliability and neutrality.
D)  Timeliness and predictive value.E) A) and C)
F) A) and B)

Question 10

Accounting standard setting has been characterized as a political process. Discuss this proposition giving an example.

Accepted Answer

Changes in standards can have significan...

Question 11

CPAs are licensed by:

Accepted Answer

A)  The AICPA.
B)  The SEC.
C)  The federal government.
D)  State governments.E) B) and D)
F) B) and C)

Question 12

Compute the cash balance at the end of the first year for Alpaca Corporation.

Accepted Answer

The answer of Compute the cash balance at the end...

Question 13

Which of the following is not a provision of the Public Company Accounting Reform and Investor Protection Act of 2002 (Sarbanes-Oxley) ? The Act

Accepted Answer

A)  Changed the entity responsible for setting auditing standards.
B)  Increased corporate executive responsibility for financial statements.
C)  Limited nonaudit services that can be performed by auditors for audit clients.
D)  Changed the entity responsible for setting accounting standards.E) A) and C)
F) A) and D)

Question 14

Materiality can be affected by the dollar amount of an item, the nature of the item, or both.

Accepted Answer

A) True 
 B)False

Question 15

The most recent example of the political process at work in standard setting is the heated debate that occurred on the issue of:

Accepted Answer

A)  Pension plan accounting.
B)  Accounting for posteretirement benefits other than pensions.
C)  Accounting for business combinations.
D)  Accounting for stock-based compensation.E) None of the above
F) A) and B)

Question 16

Gains or losses result, respectively, from the disposition of business assets for greater than, or less than, their book values.

Accepted Answer

A) True 
 B)False

Question 17

The conceptual framework's qualitative characteristic of relevance includes:

Accepted Answer

A)  Timeliness.
B)  Verifiability.
C)  Representational faithfulness.
D)  Neutrality.E) All of the above
F) B) and D)

Question 18

Disclosure notes to a company's financial statements:

Accepted Answer

A)  Are relatively unimportant facts that don't belong in the basic financial statements.
B)  Document the source of financial statement facts, like literary footnotes.
C)  Are an integral part of a company's financial statements.
D)  Are irrelevant facts that are immaterial in amount.E) B) and D)
F) None of the above

Question 19

Elements of financial statements do not include:

Accepted Answer

A)  Monetary unit.
B)  Investments by owners.
C)  Comprehensive income.
D)  Losses.E) A) and D)
F) C) and D)

Question 20

What are the key provisions of the Public Company Accounting Reform and Investor Protection (Sarbanes-Oxley) Act of 2002?

Accepted Answer

The act provides for the regulation of a...

Exam 1: Environment and Theoretical Structure of Financial Accounting

Compute the cash balance at the end of the first year for Alpaca Corporation.

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Net income equals:

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Identify or define the following terms: a. periodicity, b. monetary unit.

Correct AnswerverifiedPeriodicity - The life of a company can ...View AnswerShow Answer

The full disclosure principle requires a balance between:

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Elements of financial statements do not include:

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Materiality can be affected by the dollar amount of an item, the nature of the item, or both.

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The most recent example of the political process at work in standard setting is the heated debate that occurred on the issue of:

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Recognizing expected losses immediately, but deferring expected gains, is an example of:

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Which of the following has the authority to set accounting standards in the United States?

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If a company has gone bankrupt, its financial statements likely violate:

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Comprehensive income is another term for net income.

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CPAs are licensed by:

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Accounting standard setting has been characterized as a political process. Discuss this proposition giving an example.

Correct AnswerverifiedChanges in standards can have significan...View AnswerShow Answer

Which of the following is not a provision of the Public Company Accounting Reform and Investor Protection Act of 2002 (Sarbanes-Oxley) ? The Act

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Disclosure notes to a company's financial statements:

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The conceptual framework's qualitative characteristic of relevance includes:

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The FASB's conceptual framework's qualitative characteristics of accounting information include:

Correct AnswerverifiedShow Answer

The SEC issues accounting standards in the form of:

Correct AnswerverifiedShow Answer

What are the key provisions of the Public Company Accounting Reform and Investor Protection (Sarbanes-Oxley) Act of 2002?

Correct AnswerverifiedThe act provides for the regulation of a...View AnswerShow Answer

Gains or losses result, respectively, from the disposition of business assets for greater than, or less than, their book values.

Correct AnswerverifiedShow Answer

Correct Answer
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Periodicity - The life of a company can ...
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Changes in standards can have significan...
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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The act provides for the regulation of a...
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Correct Answer
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