Ch1 Analysis

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  • Topic: Financial Accounting Standards Board, Generally Accepted Accounting Principles, Balance sheet
  • Pages : 24 (3834 words )
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  • Published : March 29, 2013
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CHAPTER 1—INTRODUCTION TO FINANCIAL REPORTING

MULTIPLE CHOICE

1.Charging off equipment that cost less than $20 would be an example of the application of: a.|going concern|
b.|cost|
c.|matching|
d.|materiality|
e.|realization|

ANS:D

2.The going concern assumption:
a.|is applicable to all financial statements|
b.|primarily involves periodic income measurement|
c.|allows for the statements to be prepared under generally accepted accounting principles| d.|requires that accounting procedures be the same from period to period| e.|none of the answers are correct|

ANS:C

3.Understating assets and revenues is justified based on:
a.|realization assumption|
b.|matching|
c.|consistency|
d.|realization|
e.|none of the answers are correct|

ANS:E

4.The assumption that enables us to prepare periodic statements between the time that a business commences operations and the time it goes out of business is: a.|time period|
b.|business entity|
c.|historical cost|
d.|transaction|
e.|none of the answers are correct|

ANS:A

5.Valuing assets at their liquidation values is not consistent with: a.|conservatism|
b.|materiality|
c.|going concern|
d.|time period|
e.|none of the answers are correct|

ANS:C

6.The business being separate and distinct from the owners is an integral part of the: a.|time period assumption|
b.|going concern assumption|
c.|business entity assumption|
d.|realization assumption|
e.|none of the answers are correct|

ANS:C

7.The principle that assumes the reader of the financial statements is not interested in the liquidation values is: a.|conservatism|
b.|matching|
c.|time period|
d.|realization|
e.|none of the answers are correct|

ANS:E

8.An accounting period that ends when operations are at a low ebb is: a.|a calendar year|
b.|a fiscal year|
c.|the natural business year|
d.|an operating year|
e.|none of the answers are correct|

ANS:C

9.The accounting principle that assumes that inflation will not take place or will be immaterial is: a.|monetary unit|
b.|historical cost|
c.|realization|
d.|going concern|
e.|none of the answers are correct|

ANS:A

10.Valuing inventory at the lower of cost or market is an application of the: a.|time period assumption|
b.|realization principle|
c.|going concern principle|
d.|conservatism principle|
e.|none of the answers are correct|

ANS:D

11.The realization principle leads accountants to usually recognize revenue at: a.|the end of production|
b.|during production|
c.|the receipt of cash|
d.|the point of sale|
e.|none of the answers are correct|

ANS:D

12.The comment that “items that are not material may be recorded in the financial statements in the most economical and expedient manner possible” is representative of: a.|matching|
b.|conservatism|
c.|realization|
d.|materiality|
e.|none of the answers are correct|

ANS:D

13.The assumption that deals with when to recognize the costs that are associated with the revenue that is being recognized is: a.|matching|
b.|going concern|
c.|consistency|
d.|materiality|
e.|none of the answers are correct|

ANS:A

14.The most significant current source of generally accepted accounting principles is the: a.|New York Stock Exchange|
b.|Accounting Principles Board|
c.|Accounting Research Studies|
d.|AICPA committee on Accounting Procedure|
e.|Financial Accounting Standards Board|

ANS:E

15.All but one of the following statements indicates a difference between the Financial Accounting Standards Board (FASB) and prior approaches. Select the one that is not a difference. a.|The FASB is independent of the AICPA.|

b.|The size of the board is much smaller.|
c.|The FASB has broader representation.|
d.|The FASB is the primary board for the development of generally accepted accounting principles.| e.|Members of the FASB serve on a full-time basis.|...
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