1|Page
ACCOUNTING CRASH COURSE EXAM 2025
| BRAND NEW ACTUAL EXAM WITH
VERIFIED QUESTIONS AND CORRECT
SOLUTIONS
Accounting is important for - Correct-answer-firm's officers, investors, lenders,
and the general public
Generally Accepted Accounting Principles (GAAP) - Correct-answer-a set of
accounting standards that is used in the preparation of financial statements
Securities and Exchange Commission (SEC) - Correct-answer--division of corporate
finance: oversees financial reporting by corporations
Financial Accounting Standards Board (FASB) - Correct-answer-Types of
pronouncements:
-Statements of Financial Accounting Standards
,2|Page
-Interpretations
-Financial Accounting Concepts
-Emerging Issues Task Force Statements
International Financial Reporting Standards (IFRS) - Correct-answer-unified set of
international accounting standards
Assumption 1: Accounting Entity - Correct-answer--a company is considered a
separate "living" enterprise apart from its owners
-it is engaged in clearly-defined activities
-regularly reports its financial health to the general publics
-pays taxes and can file lawsuits
Assumption 2: Going Concern - Correct-answer--a corporation is assumed to
remain in existence indefinitely
-assets and liabilities are recognized values that assume the company will not
have to sell them at liquidation
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Assumption 3: Measurement - Correct-answer--financial statements must be
reported in the national monetary unit
-can only show measurable activities of a corporation
Assumption 4: Periodicity - Correct-answer--companies are required to file annual
and interim reports
-a fiscal year is frequently but not always aligned with the calendar year
Principle 1: Historical Cost - Correct-answer--financial statements report
companies' resources at an initial historical cost
-represents the easiest measurement method without a need a for appraisal and
revaluation
-minimized management discretion and subjectivity
-IFRS is more willing to allow this subjectivity to avoid misrepresenting the true
value of assets
Principle 2: Revenue Recognition - Correct-answer-accrual basis of accounting
dictates that revenues must be recorded when earned and measurable
-cannot be recorded until the order is shipped to a customer and collection from
that customer (who uses a credit card) is reasonably assured
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Principle 3: Matching Principle - Correct-answer-costs associated with making a
product must be recorded during the same period as revenue generated from
that product
Principle 4: Full Disclosure - Correct-answer-companies must reveal all relevant
economic information that they determine to make a difference to its users
-should be accomplished in: financial statements, notes to financial statements,
and supplementary information
Contraint 1: Estimates & Judgements - Correct-answer-certain measurements
cannot be performed completely accurately and must therefore utilize
conservative estimates and judgements
Constraint 2: Materiality - Correct-answer-inclusion and disclosure of financial
transactions in financial statements hinge on their size and effect on the company
performing them
-materiality varies across different entities
ACCOUNTING CRASH COURSE EXAM 2025
| BRAND NEW ACTUAL EXAM WITH
VERIFIED QUESTIONS AND CORRECT
SOLUTIONS
Accounting is important for - Correct-answer-firm's officers, investors, lenders,
and the general public
Generally Accepted Accounting Principles (GAAP) - Correct-answer-a set of
accounting standards that is used in the preparation of financial statements
Securities and Exchange Commission (SEC) - Correct-answer--division of corporate
finance: oversees financial reporting by corporations
Financial Accounting Standards Board (FASB) - Correct-answer-Types of
pronouncements:
-Statements of Financial Accounting Standards
,2|Page
-Interpretations
-Financial Accounting Concepts
-Emerging Issues Task Force Statements
International Financial Reporting Standards (IFRS) - Correct-answer-unified set of
international accounting standards
Assumption 1: Accounting Entity - Correct-answer--a company is considered a
separate "living" enterprise apart from its owners
-it is engaged in clearly-defined activities
-regularly reports its financial health to the general publics
-pays taxes and can file lawsuits
Assumption 2: Going Concern - Correct-answer--a corporation is assumed to
remain in existence indefinitely
-assets and liabilities are recognized values that assume the company will not
have to sell them at liquidation
,3|Page
Assumption 3: Measurement - Correct-answer--financial statements must be
reported in the national monetary unit
-can only show measurable activities of a corporation
Assumption 4: Periodicity - Correct-answer--companies are required to file annual
and interim reports
-a fiscal year is frequently but not always aligned with the calendar year
Principle 1: Historical Cost - Correct-answer--financial statements report
companies' resources at an initial historical cost
-represents the easiest measurement method without a need a for appraisal and
revaluation
-minimized management discretion and subjectivity
-IFRS is more willing to allow this subjectivity to avoid misrepresenting the true
value of assets
Principle 2: Revenue Recognition - Correct-answer-accrual basis of accounting
dictates that revenues must be recorded when earned and measurable
-cannot be recorded until the order is shipped to a customer and collection from
that customer (who uses a credit card) is reasonably assured
, 4|Page
Principle 3: Matching Principle - Correct-answer-costs associated with making a
product must be recorded during the same period as revenue generated from
that product
Principle 4: Full Disclosure - Correct-answer-companies must reveal all relevant
economic information that they determine to make a difference to its users
-should be accomplished in: financial statements, notes to financial statements,
and supplementary information
Contraint 1: Estimates & Judgements - Correct-answer-certain measurements
cannot be performed completely accurately and must therefore utilize
conservative estimates and judgements
Constraint 2: Materiality - Correct-answer-inclusion and disclosure of financial
transactions in financial statements hinge on their size and effect on the company
performing them
-materiality varies across different entities
