FINANCIAL STATEMENT ANALYSIS
2024 QUESTIONS WITH ANSWERS
100% VERIFIED
If the decision is made that a company is not a going concern, then generally accepted
accounting principles do not apply. - CORRECT ANSWER>>>>True
A company that uses a calendar year for its accounting year end, and a company that
uses a fiscal year for its accounting year end, both typically have a year end of
December 31. - CORRECT ANSWER>>>>False
According to the conservatism principle, inventory that has a market value below the
historical cost should be written down in order to recognize a loss. - CORRECT
ANSWER>>>>False
A quality requiring that the information be timely and that it also have predictive value,
feedback value, or both. This describes which qualitative characteristic of useful
accounting information?
a. Relevance
b. Reliability
c. Verifiability
d. Materiality - CORRECT ANSWER>>>>a. Relevance
The matching concept involves the determination of when to recognize the costs
associated with the revenue that is being recognized. - CORRECT ANSWER>>>>True
The concept of materiality allows the accountant to handle immaterial items in the most
economical and expedient manner possible. - CORRECT ANSWER>>>>True
Revenue from sales on account (credit sales) is typically recognized at the time the
cash is collected - CORRECT ANSWER>>>>False
The SEC has the legal power to determine generally accepted accounting principles. -
CORRECT ANSWER>>>>True
The accural basis income statement recognizes revenue when it is realized (realization
concept) and expenses recognized when they are incurred (matching concept). The
cash basis recognized revenue when the cash is received and expenses when
payments are made. - CORRECT ANSWER>>>>True
Under the Sarbanes-Oxley Act, the financial statements auditor doesn't have to report
on management's assertion as to the effectiveness of the internal controls and
procedures as of the company's year end. - CORRECT ANSWER>>>>False
,The responsibility for the preparation and integrity of financial statements rests with the
auditor. - CORRECT ANSWER>>>>False
A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
examination in accordance with generally accepted auditing standards. - CORRECT
ANSWER>>>>True
The accountant expresses an opinion on reviewed financial statements. - CORRECT
ANSWER>>>>False
Which of the following is not one of the three principal financial statements of a
corporation?
a. Balance Sheet
b. Statement of Cash Flows
c. Income Statements
d. Statements of Changes in Financial Position - CORRECT ANSWER>>>>d.
Statements of Changes in Financial Position
Notes to the financial statements increase the full disclosure of the statements by
providing additional information on inventory and depreciation methods, subsequent
events, contingent liabilities, etc. - CORRECT ANSWER>>>>True
The properly-prepared statement of cash flows will show operating activities, investing
activities, and financing activities, in that order. - CORRECT ANSWER>>>>True
The basic accounting equation is : Assets= Liabilities + Stockholder's equity -
CORRECT ANSWER>>>>True
The income of a partnership is taxable to the individuals who are members of the
partnership, and the owners have unlimited liability for the debts of the company. -
CORRECT ANSWER>>>>True
The SEC requires that a company's code of ethics be included in the annual report,
published on its web site, or displayed in the lobby of its corporate headquarters. -
CORRECT ANSWER>>>>False
Which of the following is a permanent account?
a. Advertising Expense
b. Dividends
c. Accounts Receivable
d. Revenue - CORRECT ANSWER>>>>c. Accounts Receivable
The three major categories of balance sheet accounts are assets, liabilities and
shareholder's equity, - CORRECT ANSWER>>>>True
, A properly prepared Balance Sheet lists current assets in order of liquidity, which is the
ease with which they can be converted into cash. - CORRECT ANSWER>>>>True
Land is depreciated because of the value of natural resources. - CORRECT
ANSWER>>>>False
Which of the following is not a current asset?
a. Notes Receivable
b. Prepaid Rent
c. Marketable Securities
d. Wages Payable - CORRECT ANSWER>>>>Wages Payable
When a rental agency collects rent in advance, it is recorded as an asset. - CORRECT
ANSWER>>>>False
Treasury stock represents the stock of the company that has been sold, repurchased,
and not retired. It is added to stockholder's equity. - CORRECT ANSWER>>>>False
The gain from the sale of land would appear on a conventional balance sheet. -
CORRECT ANSWER>>>>False
Bonds payable would usually be classified as a long term liability. - CORRECT
ANSWER>>>>True
The current assets section of the balance sheet should include inventory. - CORRECT
ANSWER>>>>True
Which of the following is not a type of inventory for a manufacturing firm?
a. Raw Materials
b. Work in Process
c. Merchandise Inventory
d. Finished Goods - CORRECT ANSWER>>>>c. Merchandise Inventory
Discuss the role of the following in the formulation of accounting principles:
American Institute of Certified Public Accountants - CORRECT ANSWER>>>>The
AICPA is an organization of CPAs that prior to 1973 accepted the
primary responsibility for the development of generally accepted
accounting principles. Their role was substantially reduced in 1973 when
the Financial Accounting Standards Board was established. Their role
was further reduced with the establishment of the Public Company
Accounting Oversight Board was established in 2002.
Discuss the role of the following in the formulation of accounting principles:
Financial Accounting Standards Board - CORRECT ANSWER>>>>The Financial
Accounting Standards Board replaced the Accounting Principles
Board as the primary rule-making body for accounting standards. It is an
2024 QUESTIONS WITH ANSWERS
100% VERIFIED
If the decision is made that a company is not a going concern, then generally accepted
accounting principles do not apply. - CORRECT ANSWER>>>>True
A company that uses a calendar year for its accounting year end, and a company that
uses a fiscal year for its accounting year end, both typically have a year end of
December 31. - CORRECT ANSWER>>>>False
According to the conservatism principle, inventory that has a market value below the
historical cost should be written down in order to recognize a loss. - CORRECT
ANSWER>>>>False
A quality requiring that the information be timely and that it also have predictive value,
feedback value, or both. This describes which qualitative characteristic of useful
accounting information?
a. Relevance
b. Reliability
c. Verifiability
d. Materiality - CORRECT ANSWER>>>>a. Relevance
The matching concept involves the determination of when to recognize the costs
associated with the revenue that is being recognized. - CORRECT ANSWER>>>>True
The concept of materiality allows the accountant to handle immaterial items in the most
economical and expedient manner possible. - CORRECT ANSWER>>>>True
Revenue from sales on account (credit sales) is typically recognized at the time the
cash is collected - CORRECT ANSWER>>>>False
The SEC has the legal power to determine generally accepted accounting principles. -
CORRECT ANSWER>>>>True
The accural basis income statement recognizes revenue when it is realized (realization
concept) and expenses recognized when they are incurred (matching concept). The
cash basis recognized revenue when the cash is received and expenses when
payments are made. - CORRECT ANSWER>>>>True
Under the Sarbanes-Oxley Act, the financial statements auditor doesn't have to report
on management's assertion as to the effectiveness of the internal controls and
procedures as of the company's year end. - CORRECT ANSWER>>>>False
,The responsibility for the preparation and integrity of financial statements rests with the
auditor. - CORRECT ANSWER>>>>False
A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
examination in accordance with generally accepted auditing standards. - CORRECT
ANSWER>>>>True
The accountant expresses an opinion on reviewed financial statements. - CORRECT
ANSWER>>>>False
Which of the following is not one of the three principal financial statements of a
corporation?
a. Balance Sheet
b. Statement of Cash Flows
c. Income Statements
d. Statements of Changes in Financial Position - CORRECT ANSWER>>>>d.
Statements of Changes in Financial Position
Notes to the financial statements increase the full disclosure of the statements by
providing additional information on inventory and depreciation methods, subsequent
events, contingent liabilities, etc. - CORRECT ANSWER>>>>True
The properly-prepared statement of cash flows will show operating activities, investing
activities, and financing activities, in that order. - CORRECT ANSWER>>>>True
The basic accounting equation is : Assets= Liabilities + Stockholder's equity -
CORRECT ANSWER>>>>True
The income of a partnership is taxable to the individuals who are members of the
partnership, and the owners have unlimited liability for the debts of the company. -
CORRECT ANSWER>>>>True
The SEC requires that a company's code of ethics be included in the annual report,
published on its web site, or displayed in the lobby of its corporate headquarters. -
CORRECT ANSWER>>>>False
Which of the following is a permanent account?
a. Advertising Expense
b. Dividends
c. Accounts Receivable
d. Revenue - CORRECT ANSWER>>>>c. Accounts Receivable
The three major categories of balance sheet accounts are assets, liabilities and
shareholder's equity, - CORRECT ANSWER>>>>True
, A properly prepared Balance Sheet lists current assets in order of liquidity, which is the
ease with which they can be converted into cash. - CORRECT ANSWER>>>>True
Land is depreciated because of the value of natural resources. - CORRECT
ANSWER>>>>False
Which of the following is not a current asset?
a. Notes Receivable
b. Prepaid Rent
c. Marketable Securities
d. Wages Payable - CORRECT ANSWER>>>>Wages Payable
When a rental agency collects rent in advance, it is recorded as an asset. - CORRECT
ANSWER>>>>False
Treasury stock represents the stock of the company that has been sold, repurchased,
and not retired. It is added to stockholder's equity. - CORRECT ANSWER>>>>False
The gain from the sale of land would appear on a conventional balance sheet. -
CORRECT ANSWER>>>>False
Bonds payable would usually be classified as a long term liability. - CORRECT
ANSWER>>>>True
The current assets section of the balance sheet should include inventory. - CORRECT
ANSWER>>>>True
Which of the following is not a type of inventory for a manufacturing firm?
a. Raw Materials
b. Work in Process
c. Merchandise Inventory
d. Finished Goods - CORRECT ANSWER>>>>c. Merchandise Inventory
Discuss the role of the following in the formulation of accounting principles:
American Institute of Certified Public Accountants - CORRECT ANSWER>>>>The
AICPA is an organization of CPAs that prior to 1973 accepted the
primary responsibility for the development of generally accepted
accounting principles. Their role was substantially reduced in 1973 when
the Financial Accounting Standards Board was established. Their role
was further reduced with the establishment of the Public Company
Accounting Oversight Board was established in 2002.
Discuss the role of the following in the formulation of accounting principles:
Financial Accounting Standards Board - CORRECT ANSWER>>>>The Financial
Accounting Standards Board replaced the Accounting Principles
Board as the primary rule-making body for accounting standards. It is an
