, Accounting 1 of 7 pages
Circle the letter of the Answer that corresponds to the displayed Question.
1. What is the matching principle?
A: Cost Model (cost - acc. depreciation + impairment loss) or Revaluation Model (asset adj. to
B: Relevance and faithful representation
C: Refers to the interrelationship of the elements of the financial statements
D: Revenues should be matched with the expenses in the same period necessary to generate
2. SEC was created under:
A: True
B: International Financial Reporting Standards (IFRS)
C: COGS [ + increase in A/R] or [ - decrease in A/R] AND [ - increase in A/P] or [ + decrease in
D: The 1934 Securities Exchange Act
3. What are the 3 elements of faithful representation?
A: Operating Expenses [ + increase in prepaid expenses] or [ - decrease in prepaid expenses]
B: Completeness, neutrality, & free from error
C: True
D: Cost Model (cost - acc. depreciation + impairment loss) or Revaluation Model (asset adj. to
4. When using the direct method to present the statement of cash flows, how do you calculate
A: Net sales [ + decrease in A/R] OR [ - increase in A/R]
B: Concept Release, Rule Proposal, & Rule Adoption
C: Held to Maturity, Available for sale, Property, Plant, Equipment, & Equity Securities
D: Operating Expenses [ + increase in prepaid expenses] or [ - decrease in prepaid expenses]
5. (IFRS) In the Statement of Cash Flows, interest expense or finance cost should be
A: Held to Maturity, Available for sale, Property, Plant, Equipment, & Equity Securities
B: Operating or financing section (once classification is chosen, all future costs must be similarly
C: economic entity, going concern, periodicity, & monetary unit
D: 1 statement (combined) approach & 2 statement (separate) approach
6. True/False: When the indirect method is used to present the statement of cash flows, interest
A: economic entity, going concern, periodicity, & monetary unit
B: Amortized Cost, Fair Value through OCI, or Fair Value through Profit/Loss
C: True
D: The 1934 Securities Exchange Act
GoldenChapter – Stuvia 2024/2025 Edition
Circle the letter of the Answer that corresponds to the displayed Question.
1. What is the matching principle?
A: Cost Model (cost - acc. depreciation + impairment loss) or Revaluation Model (asset adj. to
B: Relevance and faithful representation
C: Refers to the interrelationship of the elements of the financial statements
D: Revenues should be matched with the expenses in the same period necessary to generate
2. SEC was created under:
A: True
B: International Financial Reporting Standards (IFRS)
C: COGS [ + increase in A/R] or [ - decrease in A/R] AND [ - increase in A/P] or [ + decrease in
D: The 1934 Securities Exchange Act
3. What are the 3 elements of faithful representation?
A: Operating Expenses [ + increase in prepaid expenses] or [ - decrease in prepaid expenses]
B: Completeness, neutrality, & free from error
C: True
D: Cost Model (cost - acc. depreciation + impairment loss) or Revaluation Model (asset adj. to
4. When using the direct method to present the statement of cash flows, how do you calculate
A: Net sales [ + decrease in A/R] OR [ - increase in A/R]
B: Concept Release, Rule Proposal, & Rule Adoption
C: Held to Maturity, Available for sale, Property, Plant, Equipment, & Equity Securities
D: Operating Expenses [ + increase in prepaid expenses] or [ - decrease in prepaid expenses]
5. (IFRS) In the Statement of Cash Flows, interest expense or finance cost should be
A: Held to Maturity, Available for sale, Property, Plant, Equipment, & Equity Securities
B: Operating or financing section (once classification is chosen, all future costs must be similarly
C: economic entity, going concern, periodicity, & monetary unit
D: 1 statement (combined) approach & 2 statement (separate) approach
6. True/False: When the indirect method is used to present the statement of cash flows, interest
A: economic entity, going concern, periodicity, & monetary unit
B: Amortized Cost, Fair Value through OCI, or Fair Value through Profit/Loss
C: True
D: The 1934 Securities Exchange Act
GoldenChapter – Stuvia 2024/2025 Edition
