Practice Intermediate Acct. Exam

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Intermediate Accounting 1 Exam 1 Spring 2010
1. What are the statements of financial accounting concepts (sfac) intended to establish? a. Generally accepted accounting principles in financial reporting by businesses. b. Generally accepted accounting principles for businesses, not for profit c. The objectives and concepts for use in developing standards of financial accounting and reporting. d. The hierarchy of sources of generally accepted accounting principles.

2. During the lifetime of a business, accountants produce financial statements at arbitrary moments in time in accordance with which basic accounting concept? a. Verifiability
b. Peridodicity
c. Conservatism
d. Matching

3. Continuation of an accounting entity in the absence of evidence to the contrary is an example of the basic concept of a. Accounting entity
b. Consistency
c. Going concern
d. Substance over form

4. Reporting inventory at the lower of cost or market is a departure from the accounting principle of a. Historical cost
b. Consistency
c. Conservatism
d. Full disclosure

5. SFAC 2, Qualitative Characteristics of accounting information, identifies the two primary qualities that make accounting information useful for decision making as a. Neutral and verifiable

b. Fair and precise
c. Relevant and reliable
d. Consistent and comparable

6. According to statements of financial accounting concepts, neutrality is an ingredient of Reliability Relevance
a. Yes yes
b. Yes no
c. No yes
d. No no

7. Which of the following is considered a pervasive constraint by SFAC 2? a. Benefits> costs
b. Conservatism
c. Timeliness
d. Verifiability

8. Materiality is the threshold for recognition of accounting information. Which of the following statements is true with regard to materiality? a. Materiality judgments generally may be based solely on the magnitude of the item b. The circumstances in which the judgment has to be made is an integral aspect of a materiality judgment c. Relevant accounting information is always material

d. Reliable accounting information is always material

9. Which of the following accounting concepts states that an accounting transaction should be supported by sufficient evidence to allow two or more qualified individuals to arrive at essentially similar measures and conclusions? a. Matching

b. Verifiability
c. Periodicity
d. Stable monetary unit

10. An essential characteristic of a liability is that
a. The obligated entity must pay cash to a recipient entity b. It must be legally enforceable
c. The identity of the recipient entity must be known to the obligated entity before the time of settlement d. The obligation must have arisen as the result of a previous transaction

11. Which of the following statements about accrual accounting is false? a. Accrual accounting is concerned with the processes by which cash expended on resources and activities is returned as more (or perhaps less) cash to the entity, not just with the beginning and end of that process. b. Accrual accounting recognizes that buying, producing, selling, and other operations of an entity during a period often do not coincide with the cash receipts and payments of the period. c. Accrual accounting attempts to record the financial effects of an entity of transactions and other events and circumstances that have cash consequences for an entity d. Accrual accounting is primarily concerned with the cash receipts and cash payments of an entity 12. Which of the following best describes the distinction between expenses and losses? a. Losses are reported net of related tax effect, but expenses are not reported net of tax b. Losses are extraordinary charges, but expenses are ordinary charges...
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