In 1934, The United States Congress established which one of the following organizations to regulate corporate financial reporting?
aks198QUESTION 1 of 20
Financial Statements follow:
A. rigid guidelines that require specific adherence to regulated procedures.
B. generally accepted guidelines that allow management to choose among different procedures.
C. general guidelines with little choice among different procedures.
D. legal requirements for uniform presentation and disclosure.
QUESTION 2 of 20
In 1934, The United States Congress established which one of the following organizations to regulate corporate financial reporting?
A. Securities Exchange Commission
B. Financial Accounting Standards Board
C. National Association of Securities Dealers
D. New York Stock Exchange
QUESTION 3 of 20
Published reports of public companies include a discussion of the financial condition, results of operations, and future plans for the company known as the:
A. President’s message
B. Board of Director’s analysis
C. management discussion and analysis
D. management representation letter.
QUESTION 4 of 20
The overriding role of GAAP is to assure that financial statements:
A. are accurate and free from fraud.
B. represent faithfully and clearly the economic condition and performance of the company.
C. do not contain any representation that could jeopardize the accountant.
D. provide stockholders all of the information they need to assess management’s performance.
QUESTION 5 of 20
Financial information that is verifiable, faithfully represented, and reasonably free of error and bias is:
A. consistent.
B. comparable.
C. relevant.
D. reliable.
QUESTION 6 of 20
Using the same accounting methods to record and report similar events from period to period demonstrates:
A. consistency
B. comparability
C. neutrality
D. faithful representation
QUESTION 7 of 20
The Financial Accounting Standards Board has responsibility for the establishment of accounting standards for:
A. North America.
B. the United States.
C. the United States and Europe
D. the world.
QUESTION 8 of 20
The due process procedures of the FASB occur according to which one of the following series of orderly steps?
A. Discussion memorandum, exposure draft, voting
B. Public hearing, discussion memorandum, voting
C. Discussion memorandum, public hearing, voting
D. Exposure draft, discussion memorandum, voting
QUESTION 9 of 20
To measure earnings under accrual accounting, revenues are recognized when they are:
A. received.
B. received and earned.
C. earned and become measurable.
D. received and become measurable.
QUESTION 10 of 20
The matching principle requires that expenses be recognized.
A. in the same period as the costs expire or assets are used
B. in the same period in which the revenues are recognized that the expenses help to produce.
C. when the costs are paid by the entity.
D. in the same period that the revenue is received that the expenses help to produce.
QUESTION 11 of 20
Revenue is most frequently recognized at the:
A. signing of a contract
B. completion of production
C. delivery of goods or services
D. collection of sales proceeds
QUESTION 12 of 20
Which one of the following costs would be a product cost?
A. Transportation costs to acquire inventory
B. Advertising
C. Sales Commissions
D. Depreciation of an office computer
QUESTION 13 of 20
The best measure of a firm’s sustainable income is:
A. comprehensive income
B. income from continuing operations
C. income before extraordinary items.
D. net income
QUESTION 14 of 20
To be reported as an extraordinary item on the income statement, an event must be:
A. unusual in nature.
B. an infrequent occurrence.
C. both unusual in nature and an infrequent occurrence.
D. either unusual in nature or an infrequent occurrence.
QUESTION 15 of 20
The Williams Company decided in the current year to change their method of depreciation for certain types of equipment that were experiencing rapid technological changes. The Accumulated Depreciation account was $450,000 at the beginning of the current year. Depreciation in prior years would have been $800,000 under the new method. Williams Company experiences a 40% tax burden. Which one of the following entries would the company make to record this change?
A. Debit Retained Earnings $350,000
Credit Accumulated Depreciation $350,000
B. Debit Retained Earnings $210,000
Debit Deferred Income Tax Payable $140,000
Credit Accumulated Depreciation $350,000
C. Debit Cumulative Effect of Change in Accounting
Principle, net of tax effect $350,000
Credit Accumulated Depreciation $350,000
D. Debit Cumulative Effect of Change in Accounting
Principle, net of tax effect $210,000
Debit Deferred Income Tax Payable $140,000
Credit Accumulated Depreciation $350,000
QUESTION 16 of 20
Which of the following is part of comprehensive income?
A. Gains on sales of treasury stock
B. Net operating income
C. Receipt of land donated by a governmental unit
D. Sale of common stock above par
QUESTION 17 of 20
Which one of the following items is not included in the computation of comprehensive income (ignoring tax effects)?
A. Gain on sale of treasury stock
B. Minimum pension liability adjustment
C. Net income
D. Unrealized gains or losses on securities
QUESTION 18 of 20
James, Inc. discovered that equipment purchased three years ago for $600,000 will not last as long as originally estimated. The firm was depreciating the equipment at the rate of $80,000 per year with an estimated salvage value of $40,000. New estimates indicate that the equipment will last a total of five years with no salvage value. How much should James, Inc. record as depreciation in year four?
A. $80,000
B. $120,000
C. $180,000
D. $240,000
QUESTION 19 of 20
Refer to the following data for Andrews Construction Company:
The company is building a large complex at a price of $10,000.00. This three-year project is estimated to cost a total of $80,000. Actual yearly data are as follows:
Year 1 Year 2 Year 3
Cost incurred $2,000,000 $3,000,000 $2,500,000
Estimated completion costs $6,000,000 $3,000,000 $0
Billings $1,500,000 $3,500,000 $5,000,000
Cash Collected $1,000,000 $3,000,000 $6,000,000
Which one of the following entries would be made in year 1 to record the income recognized using the percentage-of completion method of revenue recognition?
A. Debit Inventory: Construction in Progress $500,000
Credit Income on Long-term Construction Contract $500,000
B. Debit Inventory: Construction in Progress $750,000
Credit Billing on Construction in Progress $750,000
C. Debit Inventory: Construction in Progress $1,250,000
Credit Billings on Construction In Progress $1,250,000
D. Debit Income on Long-term Construction Contracts $6,250,000
Credit Accounts Payable, Cash, etc. $6,250,000
QUESTION 20 of 20
Refer to the following data for Joe’s Appliance Center. The business records revenue using the installment sales method.
Sales Year 1 Year 2
Cost of Goods Sold $200,000 $250,000
Cash Collections from $140,000 $162,500
Year 1 Sales $100,000 $80,000
$130,000
How much realized gross profit on installment sales will the business record in Year 2?
- A. $24,000
- B. $45,500
- C. $69,500
- D. $130,000
12 years ago
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