CORPORATE FINANCE UPDATED ACTUAL EXAM QUESTIONS CORRECT ANSWERS GRADED A

CORPORATE FINANCE UPDATED ACTUAL EXAM QUESTIONS CORRECT ANSWERS GRADED
A PLUS




Question:
GAAP

Answer:
Generally Accepted Accounting Principles. The standards and rules that accountants follow while
recording and reporting financial activities.



Question:
Economic Entity

Answer:
Company keeps its activity separate from its owners and other businesses. One firm, one set of
books.



Question:
Going Concern

Answer:
The accounting assumption that a business is expected to operate indefinitely. Assumes the
company will continue so asset values are at a historical cost.



Question:
Monetary Unit

Answer:
Financial transactions are denominated in a stable unit of measure. Everything is in US dollars



Question:

, Accounting Periods

Answer:
The results of operations for an entity must be reported on a periodic basis, usually a year



Question:
Revenue/Expense Matching

Answer:
All expenses incurred to generate revenues should be recognized during the same period as those
revenues



Question:
Conservatism

Answer:
Accounting theory advocates that it is better for potential measurement errors to understate rather
than overstate profits



Question:
Understandability

Answer:
Information presented in a clear and concise fashion so that users can interpret it and comprehend its
meaning.



Question:
Relevance

Answer:
The quality of information that indicates the information makes a difference in a decision.