CORPORATE FINANC 1 UPDATED ACTUAL EXAM QUESTIONS CORRECT ANSWERS GRADED
A PLUS
Question:
Managerial Accounting
Answer:
Internal reports. Used mostly by managers for planning and control purposes and specific to the
needs of individual departments and managers. Can be used to compare actual production costs with
budgeted costs.
Question:
Financial Accounting
Answer:
External use. Includes stockholders, lenders, financial analysis, economists, labor unions, trade
associations and academic faculty.
Question:
GAAP
Answer:
Generally Accepted Accounting Principles. The standards and rules that accountants follow while
recording and reporting financial activities.
Question:
Economic Entity
Answer:
Company keeps its activity separate from its owners and other businesses. One firm, one set of
books.
, Question:
Going Concern
Answer:
The accounting assumption that a business is expected to operate indefinitely. Assumes the
company will continue so asset values are at a historical cost.
Question:
Monetary Unit
Answer:
Financial transactions are denominated in a stable unit of measure. Everything is in US dollars
Question:
Accounting Periods
Answer:
The results of operations for an entity must be reported on a periodic basis, usually a year
Question:
Revenue/Expense Matching
Answer:
All expenses incurred to generate revenues should be recognized during the same period as those
revenues
Question:
Conservatism
Answer:
Accounting theory advocates that it is better for potential measurement errors to understate rather
than overstate profits
A PLUS
Question:
Managerial Accounting
Answer:
Internal reports. Used mostly by managers for planning and control purposes and specific to the
needs of individual departments and managers. Can be used to compare actual production costs with
budgeted costs.
Question:
Financial Accounting
Answer:
External use. Includes stockholders, lenders, financial analysis, economists, labor unions, trade
associations and academic faculty.
Question:
GAAP
Answer:
Generally Accepted Accounting Principles. The standards and rules that accountants follow while
recording and reporting financial activities.
Question:
Economic Entity
Answer:
Company keeps its activity separate from its owners and other businesses. One firm, one set of
books.
, Question:
Going Concern
Answer:
The accounting assumption that a business is expected to operate indefinitely. Assumes the
company will continue so asset values are at a historical cost.
Question:
Monetary Unit
Answer:
Financial transactions are denominated in a stable unit of measure. Everything is in US dollars
Question:
Accounting Periods
Answer:
The results of operations for an entity must be reported on a periodic basis, usually a year
Question:
Revenue/Expense Matching
Answer:
All expenses incurred to generate revenues should be recognized during the same period as those
revenues
Question:
Conservatism
Answer:
Accounting theory advocates that it is better for potential measurement errors to understate rather
than overstate profits
