ACCY 201 TEST 1 QUESTIONS WITH
CORRECT ANSWERS
A company must report details behind the financial statements that would impact users'
decisions. Disclosures are often in the footnotes to the financial statements. - Answer-
Full Disclosure Principle
Generally related to the financial statement headings - Answer- Assumptions
Assumption that the business will continue operating instead of being closed or sold. -
Answer- Going Concern Assumption
Assumption that we can express transactions and events in monetary units - Answer-
Monetary Unit Assumption
Assumption that the life of a company can be divided into time periods and that useful
reports can be prepared for those periods. - Answer- Time Period Assumptions
Assumption that business is accounted for separately from other business entities,
including its owner. - Answer- Business Entity Assumption
Reasonableness of info to be reported - Answer- Constraints
Only the info that would influence the decisions of a reasonable person needs to be
disclosed. - Answer- Materiality
The benefits of the info disclosed must be greater than the cost of providing the info -
Answer- Cost-Benefit
Planning transactions to minimize taxes - Answer- tax accounting
Analyzing external financial reports - Answer- Financial accounting
Internal auditing - Answer- managerial accounting
Consulting with treasurer on cash flows - Answer- managerial accounting
Cost accounting - Answer- managerial accounting
CORRECT ANSWERS
A company must report details behind the financial statements that would impact users'
decisions. Disclosures are often in the footnotes to the financial statements. - Answer-
Full Disclosure Principle
Generally related to the financial statement headings - Answer- Assumptions
Assumption that the business will continue operating instead of being closed or sold. -
Answer- Going Concern Assumption
Assumption that we can express transactions and events in monetary units - Answer-
Monetary Unit Assumption
Assumption that the life of a company can be divided into time periods and that useful
reports can be prepared for those periods. - Answer- Time Period Assumptions
Assumption that business is accounted for separately from other business entities,
including its owner. - Answer- Business Entity Assumption
Reasonableness of info to be reported - Answer- Constraints
Only the info that would influence the decisions of a reasonable person needs to be
disclosed. - Answer- Materiality
The benefits of the info disclosed must be greater than the cost of providing the info -
Answer- Cost-Benefit
Planning transactions to minimize taxes - Answer- tax accounting
Analyzing external financial reports - Answer- Financial accounting
Internal auditing - Answer- managerial accounting
Consulting with treasurer on cash flows - Answer- managerial accounting
Cost accounting - Answer- managerial accounting
