Accounting Crash Course Questions
With Correct Answers
The bRegulating bBody bthat bOversees bthe bDevelopment bof bAccounting bStandards bin
bthe bU.S. bis: b- bcorrect banswers✔✔FASB bformulates baccounting bstandards bthrough
bthe bissuance bof bStatements bof bFinancial bAccounting bStandards b(SFAS). bThese
bstatements bmake bup bthe bbody bof baccounting brules bknown bas bthe bGenerally
bAccepted bAccounting bPrinciples b(GAAP). bIASB boversees binternational bfinancial
breporting bstandards b(IFRS).
Which bof bthe bFollowing bStatements bis bTrue? b- bcorrect banswers✔✔Publicly btraded
bUS bcompanies bare brequired bto bfile bthree b10-Q's band bone b10-K bannually. bPublicly-
traded bUS bcompanies bmust bfile bthree bquarterly b(10-Q) breports bat bthe bend bof btheir
b1Q, b2Q band b3Q, band ba b10-K bat bthe bend bof btheir bfiscal byear.
The bIncome bStatement bis bDesigned bto bMeasure: b- bcorrect banswers✔✔The bprofits
bof ba bfirm bover ba bperiod bof btime. bThe bincome bstatement bis bdesigned bto bshow bthe
bprofitability bof ba bbusiness b(revenues bless bexpenses) bover ba bperiod bof btime
b(usually ba bquarter bor byear). bThe bincome bstatement bis ban baccrual bmeasure bof
bprofits band bthus bnot bthe bbest bmeasure bof bcash bflows. bIt bis balso ba bpoor bmeasure
bof ba bcompany's bliquidity bor bsolvency, bwhich binvolves ban banalysis bof ba bcompany's
bshort bterm band blong bterm bassets band bliabilities, brespectively. bThe bbalance bsheet
bis bdesigned bto bshow ba bfirm's bfinancial bposition, bwhile bthe bcash bflow bstatement
bshows bthe bamount bof bcash bgenerated bby ba bfirm.
The b'Matching bPrinciple' bStates bThat: b- bcorrect banswers✔✔Costs bassociated bwith
bmaking ba bproduct bmust bbe brecognized bduring bthe bsame bperiod bas brevenue
bgenerated bfrom bthat bproduct.
Jones bCompany bOperating bIncome bCalculation: b- bcorrect banswers✔✔Operating
bincome b= b$234,000 b= b$734,000 b- b$500,000.
Which bof bthe bFollowing bStatements bis bFalse? b- bcorrect banswers✔✔Revenue bis
brecognized bat bthe btime bof bdelivery bof bgoods band bservices bregardless bof bwhen
bthe bcash bis breceived.
Clayton bCorp. bGross bProfit bMargin bCalculation: b- bcorrect banswers✔✔Gross bprofit
bpercentage b= bGross bprofit bdivided bby bSales b= b$620,000 b÷ b$1,000,000 b= b62%.
With Correct Answers
The bRegulating bBody bthat bOversees bthe bDevelopment bof bAccounting bStandards bin
bthe bU.S. bis: b- bcorrect banswers✔✔FASB bformulates baccounting bstandards bthrough
bthe bissuance bof bStatements bof bFinancial bAccounting bStandards b(SFAS). bThese
bstatements bmake bup bthe bbody bof baccounting brules bknown bas bthe bGenerally
bAccepted bAccounting bPrinciples b(GAAP). bIASB boversees binternational bfinancial
breporting bstandards b(IFRS).
Which bof bthe bFollowing bStatements bis bTrue? b- bcorrect banswers✔✔Publicly btraded
bUS bcompanies bare brequired bto bfile bthree b10-Q's band bone b10-K bannually. bPublicly-
traded bUS bcompanies bmust bfile bthree bquarterly b(10-Q) breports bat bthe bend bof btheir
b1Q, b2Q band b3Q, band ba b10-K bat bthe bend bof btheir bfiscal byear.
The bIncome bStatement bis bDesigned bto bMeasure: b- bcorrect banswers✔✔The bprofits
bof ba bfirm bover ba bperiod bof btime. bThe bincome bstatement bis bdesigned bto bshow bthe
bprofitability bof ba bbusiness b(revenues bless bexpenses) bover ba bperiod bof btime
b(usually ba bquarter bor byear). bThe bincome bstatement bis ban baccrual bmeasure bof
bprofits band bthus bnot bthe bbest bmeasure bof bcash bflows. bIt bis balso ba bpoor bmeasure
bof ba bcompany's bliquidity bor bsolvency, bwhich binvolves ban banalysis bof ba bcompany's
bshort bterm band blong bterm bassets band bliabilities, brespectively. bThe bbalance bsheet
bis bdesigned bto bshow ba bfirm's bfinancial bposition, bwhile bthe bcash bflow bstatement
bshows bthe bamount bof bcash bgenerated bby ba bfirm.
The b'Matching bPrinciple' bStates bThat: b- bcorrect banswers✔✔Costs bassociated bwith
bmaking ba bproduct bmust bbe brecognized bduring bthe bsame bperiod bas brevenue
bgenerated bfrom bthat bproduct.
Jones bCompany bOperating bIncome bCalculation: b- bcorrect banswers✔✔Operating
bincome b= b$234,000 b= b$734,000 b- b$500,000.
Which bof bthe bFollowing bStatements bis bFalse? b- bcorrect banswers✔✔Revenue bis
brecognized bat bthe btime bof bdelivery bof bgoods band bservices bregardless bof bwhen
bthe bcash bis breceived.
Clayton bCorp. bGross bProfit bMargin bCalculation: b- bcorrect banswers✔✔Gross bprofit
bpercentage b= bGross bprofit bdivided bby bSales b= b$620,000 b÷ b$1,000,000 b= b62%.
