Acct 301
Test 1 Chapters 1-4
Student: ___________________________________________________________________________
1. A cause-and-effect relationship is implicit in the:
A. Realization principle.
B. Historical cost principle.
C. Matching principle.
D. Going concern assumption. 2. Accounting standard setting has been characterized as:
A. A political process.
B. Using the scientific method.
C. Pure deductive reasoning.
D. Pure inductive reasoning. 3. The FASB 's conceptual framework 's qualitative characteristics of accounting information include:
A. Historical cost.
B. Realization.
C. Faithful representation.
D. Full disclosure. 4. Fundamental qualitative characteristics of accounting information are:
A. Relevance and comparability.
B. Comparability and consistency.
C. Faithful representation and relevance.
D. Neutrality and consistency. 5. The possibility that the capital markets ' focus on periodic profits may tempt a company 's management to bend or even break accounting rules to inflate reported net income is an example of:
A. An ethical dilemma.
B. An accounting theory issue.
C. A technical accounting issue.
D. None of the above is correct. 6. The assumption that in the absence of contrary information a business entity will continue indefinitely is the:
A. Periodicity assumption.
B. Entity assumption.
C. Going concern assumption.
D. Historical cost assumption. 7. Ace Bonding Company purchased merchandise inventory on account. The inventory costs $2,000 and is expected to sell for $3,000. How should Ace record the purchase? A. Option A
B. Option B
C. Option C
D. Option D Note: The $3,000 sales price is irrelevant for this example as no sale takes place. Here we are only concerned with recording the acquisition of inventory.
8. The adjusting entry required when amounts previously recorded as unearned revenues are earned includes:
A. A debit to a liability.
B. A debit to an asset.
C. A credit to a
Student: ___________________________________________________________________________
1. A cause-and-effect relationship is implicit in the:
A. Realization principle.
B. Historical cost principle.
C. Matching principle.
D. Going concern assumption. 2. Accounting standard setting has been characterized as:
A. A political process.
B. Using the scientific method.
C. Pure deductive reasoning.
D. Pure inductive reasoning. 3. The FASB 's conceptual framework 's qualitative characteristics of accounting information include:
A. Historical cost.
B. Realization.
C. Faithful representation.
D. Full disclosure. 4. Fundamental qualitative characteristics of accounting information are:
A. Relevance and comparability.
B. Comparability and consistency.
C. Faithful representation and relevance.
D. Neutrality and consistency. 5. The possibility that the capital markets ' focus on periodic profits may tempt a company 's management to bend or even break accounting rules to inflate reported net income is an example of:
A. An ethical dilemma.
B. An accounting theory issue.
C. A technical accounting issue.
D. None of the above is correct. 6. The assumption that in the absence of contrary information a business entity will continue indefinitely is the:
A. Periodicity assumption.
B. Entity assumption.
C. Going concern assumption.
D. Historical cost assumption. 7. Ace Bonding Company purchased merchandise inventory on account. The inventory costs $2,000 and is expected to sell for $3,000. How should Ace record the purchase? A. Option A
B. Option B
C. Option C
D. Option D Note: The $3,000 sales price is irrelevant for this example as no sale takes place. Here we are only concerned with recording the acquisition of inventory.
8. The adjusting entry required when amounts previously recorded as unearned revenues are earned includes:
A. A debit to a liability.
B. A debit to an asset.
C. A credit to a