Financial Accounting Ivy Software
UPDATED ACTUAL Questions and
CORRECT Answers
Bookkeeping - CORRECT ANSWER - identifying, measuring, and recording steps of the
accounting process
Financial accounting - CORRECT ANSWER - external
Managerial accounting - CORRECT ANSWER - internal
Tax Accounting - CORRECT ANSWER - governmental, help file tax returns
Tax accountants - CORRECT ANSWER - difficult for them to keep up with new tax
legislation passed every year
Accounting entity - CORRECT ANSWER - non-profit, individual, or business; any
organization for which separate accounting data is gathered & processed
Proprietorship - CORRECT ANSWER - one owner; not a legal entity; no legal distinction
between business and owner; for accounting purposes, there is a distinction
Partnership - CORRECT ANSWER - 2+ individuals; not a legal entity; no legal distinction
between business and owner; for accounting purposes, there is a distinction
Corporations - CORRECT ANSWER - owned by many shareholders; are legal entities;
continue to exist after owners death; owners liable only for amount invested (LLC)
, International Accounting Standards Board (IASB) - CORRECT ANSWER - most
important professional accounting organization
Financial Accounting Standards Board (FASB) - CORRECT ANSWER - authoritative
body of the US accounting profession; voice of the accounting principles (GAAP)
Securities & Exchange Commission (SEC) - CORRECT ANSWER - regulates public
corporations; requires public corporations to release financial reports (i.e., 10-K) to the public
every year
economic entity - CORRECT ANSWER - one firm, one set of books
going concern - CORRECT ANSWER - a firm has value beyond the liquidation value of
its assets; entity will continue operations for the foreseeable future
monetary concept - CORRECT ANSWER - economic events must be measured in a
common denominator
accounting period - CORRECT ANSWER - periodic measures of economic performance
and financial position; usually equal in length
matching - CORRECT ANSWER - expenses incurred to generate revenues should be
recognized during the same period as those revenues
conservatism - CORRECT ANSWER - it's better for potential measurement errors to
understate rather than overstate PROFITS
understandibility - CORRECT ANSWER - accounting information should be
comprehensible to those who have a reasonable understanding of business and economic
activities
UPDATED ACTUAL Questions and
CORRECT Answers
Bookkeeping - CORRECT ANSWER - identifying, measuring, and recording steps of the
accounting process
Financial accounting - CORRECT ANSWER - external
Managerial accounting - CORRECT ANSWER - internal
Tax Accounting - CORRECT ANSWER - governmental, help file tax returns
Tax accountants - CORRECT ANSWER - difficult for them to keep up with new tax
legislation passed every year
Accounting entity - CORRECT ANSWER - non-profit, individual, or business; any
organization for which separate accounting data is gathered & processed
Proprietorship - CORRECT ANSWER - one owner; not a legal entity; no legal distinction
between business and owner; for accounting purposes, there is a distinction
Partnership - CORRECT ANSWER - 2+ individuals; not a legal entity; no legal distinction
between business and owner; for accounting purposes, there is a distinction
Corporations - CORRECT ANSWER - owned by many shareholders; are legal entities;
continue to exist after owners death; owners liable only for amount invested (LLC)
, International Accounting Standards Board (IASB) - CORRECT ANSWER - most
important professional accounting organization
Financial Accounting Standards Board (FASB) - CORRECT ANSWER - authoritative
body of the US accounting profession; voice of the accounting principles (GAAP)
Securities & Exchange Commission (SEC) - CORRECT ANSWER - regulates public
corporations; requires public corporations to release financial reports (i.e., 10-K) to the public
every year
economic entity - CORRECT ANSWER - one firm, one set of books
going concern - CORRECT ANSWER - a firm has value beyond the liquidation value of
its assets; entity will continue operations for the foreseeable future
monetary concept - CORRECT ANSWER - economic events must be measured in a
common denominator
accounting period - CORRECT ANSWER - periodic measures of economic performance
and financial position; usually equal in length
matching - CORRECT ANSWER - expenses incurred to generate revenues should be
recognized during the same period as those revenues
conservatism - CORRECT ANSWER - it's better for potential measurement errors to
understate rather than overstate PROFITS
understandibility - CORRECT ANSWER - accounting information should be
comprehensible to those who have a reasonable understanding of business and economic
activities
