ACCOUNTING CHAPTER 24 UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
Question:
1. Which of the following should be disclosed in a Summary
of Significant Accounting Policies?
a. Types of executory contracts
b. Amount for cumulative effect of change in accounting
principle
c. Claims of equity holders
d. Depreciation method followed
Answer:
D
Question:
2. An example of an inventory accounting policy that
should be disclosed in a Summary of Significant
Accounting Policies is the
a. amount of income resulting from the involuntary
liquidation of LIFO.
b. major backlogs of inventory orders.
c. method used for pricing inventory.
d. separation of inventory into raw materials, work-in-
process, and finished goods.
Answer:
C
Question:
3. Which of the following is true regarding whether errors
and irregularities are distortions of facts?
Errors Irregularities
a. Yes Yes
b. Yes No
c. No Yes
d. No No
Answer:
C
, Question:
4. he full disclosure principle, as adopted by the accounting
profession, is best described by which of the following?
a. All information related to an entity's business and
operating objectives is required to be disclosed in the
financial statements.
b. Information about each account balance appearing in
the financial statements is to be included in the notes to
the financial statements.
c. Enough information should be disclosed in the
financial statements so a person wishing to invest in the
stock of the company can make a profitable decision.
d. Disclosure of any financial facts significant enough to
influence the judgment of an informed reader.
Answer:
D
Question:
5. The focus of APB Opinion No. 22 is on the disclosure of
accounting policies. This information is important to
financial statement readers in determining
a. net income for the year.
b. whether accounting policies are consistently applied
from year to year.
c. the value of obsolete items included in ending
inventory.
d. whether the working capital position is adequate for
future operations.
Answer:
B
Question:
6. If a business entity entered into certain related party
transactions, it would be required to disclose all of the
following information except the
a. nature of the relationship between the parties to the
transactions.
b. nature of any future transactions planned between the
parties and the terms involved.
c. dollar amount of the transactions for each of the
periods for which an income state-ment is presented.
d. amounts due from or to related parties as of the date
of each balance sheet presented.
Answer:
B
QUESTIONS AND CORRECT ANSWERS
Question:
1. Which of the following should be disclosed in a Summary
of Significant Accounting Policies?
a. Types of executory contracts
b. Amount for cumulative effect of change in accounting
principle
c. Claims of equity holders
d. Depreciation method followed
Answer:
D
Question:
2. An example of an inventory accounting policy that
should be disclosed in a Summary of Significant
Accounting Policies is the
a. amount of income resulting from the involuntary
liquidation of LIFO.
b. major backlogs of inventory orders.
c. method used for pricing inventory.
d. separation of inventory into raw materials, work-in-
process, and finished goods.
Answer:
C
Question:
3. Which of the following is true regarding whether errors
and irregularities are distortions of facts?
Errors Irregularities
a. Yes Yes
b. Yes No
c. No Yes
d. No No
Answer:
C
, Question:
4. he full disclosure principle, as adopted by the accounting
profession, is best described by which of the following?
a. All information related to an entity's business and
operating objectives is required to be disclosed in the
financial statements.
b. Information about each account balance appearing in
the financial statements is to be included in the notes to
the financial statements.
c. Enough information should be disclosed in the
financial statements so a person wishing to invest in the
stock of the company can make a profitable decision.
d. Disclosure of any financial facts significant enough to
influence the judgment of an informed reader.
Answer:
D
Question:
5. The focus of APB Opinion No. 22 is on the disclosure of
accounting policies. This information is important to
financial statement readers in determining
a. net income for the year.
b. whether accounting policies are consistently applied
from year to year.
c. the value of obsolete items included in ending
inventory.
d. whether the working capital position is adequate for
future operations.
Answer:
B
Question:
6. If a business entity entered into certain related party
transactions, it would be required to disclose all of the
following information except the
a. nature of the relationship between the parties to the
transactions.
b. nature of any future transactions planned between the
parties and the terms involved.
c. dollar amount of the transactions for each of the
periods for which an income state-ment is presented.
d. amounts due from or to related parties as of the date
of each balance sheet presented.
Answer:
B
