Accounting Final - WileyPlus Exam M/C
UPDATED ACTUAL Questions and
CORRECT Answers
The Financial Accounting Standards Board Accounting Standards Codification
does not create new GAAP.
eliminates nonessential information.
simplifies user access to all authoritative U.S. generally accepted accounting principles.
all of these answer choices are correct. - CORRECT ANSWER✔✔- all of these answer
choices are correct.
Which of the following would result if there was not a set of generally accepted and
universally practiced accounting standards?
It would be almost impossible to prepare statements that could be compared.
Each company would have to develop its own standards.
Readers of financial statements would have to familiarize themselves with every company's
peculiar accounting and reporting practices.
All of these answer choices are correct. - CORRECT ANSWER✔✔- All of these answer
choices are correct.
The American Institute of Certified Public Accountants (AICPA) continues to be involved in
all of the following except
developing auditing standards for public companies.
providing professional education programs.
grading the CPA exam.
developing and enforcing professional ethics. - CORRECT ANSWER✔✔- developing
auditing standards for public companies.
What is not due process in the context of standard setting at the FASB?
Interested parties can make their views known.
No public hearings are held on proposed accounting standards.
Public hearings are held on proposed accounting standards.
The FASB operates in full view of the public. - CORRECT ANSWER✔✔- No public
hearings are held on proposed accounting standards.
,A company has a factory building that originally cost the company $250,000. The current fair
value of the factory building is $3 million. The president would like to report the difference
as a gain. The write-up would represent a violation of which accounting assumption or
principle?
Revenue recognition
Monetary unit
Going concern
Historical cost - CORRECT ANSWER✔✔- Historical cost
Which of the following is a constraint in presenting financial information?
Relevance
Consistency
Full disclosure
Cost - CORRECT ANSWER✔✔- Cost
Materiality is used in all of the following situations of providing financial information, except
where omission of the information would result in bias.
where an amount is of relative large size and importance.
where it would not make a difference in the actions of a decision maker.
where it would impact the judgment of a reasonable person. - CORRECT ANSWER✔✔-
where it would not make a difference in the actions of a decision maker.
What is prudence or conservatism?
When in doubt, recognizing the option that is least likely to overstate assets and income
Recognizing the option that is least likely to overstate assets and income
Recognizing revenue when earned and realized
Understating assets and net income - CORRECT ANSWER✔✔- When in doubt, recognizing
the option that is least likely to overstate assets and income
In classifying the elements of financial statements, the primary distinction between revenues
and gains is
the costs versus the benefits of the alternative methods of disclosing the transactions
involved.
the likelihood that the transactions involved will recur in the future.
the materiality of the amounts involved.
the nature of the activities that gave rise to the transactions involved. - CORRECT
ANSWER✔✔- the nature of the activities that gave rise to the transactions involved.
, Changing the method of inventory valuation should be reported in the financial statements
because of which qualitative characteristic of accounting information?
Consistency
Comparability
Verifiability
Timeliness - CORRECT ANSWER✔✔- Consistency
The underlying theme of the conceptual framework is
comparability.
faithful representation.
decision usefulness.
understandability. - CORRECT ANSWER✔✔- decision usefulness.
The objective of general-purpose financial reporting is?
to provide users with financial information that implies total freedom from error
to provide financial information about the reporting entity that is useful to present and
potential equity investors, lenders, and other creditors in making decisions in their capacity as
capital providers
to provide a metric for financial information used to determine when the boundary between
two or more entities should be disregarded and the entities considered to be a licensing
arrangement
to provide companies with the option to select information that favors one set of interested
parties over another - CORRECT ANSWER✔✔- to provide financial information about the
reporting entity that is useful to present and potential equity investors, lenders, and other
creditors in making decisions in their capacity as capital providers
What is a purpose of having a conceptual framework?
To enable the profession to more quickly solve emerging practical problems and to provide a
foundation from which to build more useful standards.
To make sure that economic activity can be identified with a particular legal entity.
To segregate activities among different companies.
To provide comparable information for different companies. - CORRECT ANSWER✔✔- To
enable the profession to more quickly solve emerging practical problems and to provide a
foundation from which to build more useful standards.
Accounting information is considered to be relevant when it
is verifiable and neutral.
is capable of making a difference in a decision.
UPDATED ACTUAL Questions and
CORRECT Answers
The Financial Accounting Standards Board Accounting Standards Codification
does not create new GAAP.
eliminates nonessential information.
simplifies user access to all authoritative U.S. generally accepted accounting principles.
all of these answer choices are correct. - CORRECT ANSWER✔✔- all of these answer
choices are correct.
Which of the following would result if there was not a set of generally accepted and
universally practiced accounting standards?
It would be almost impossible to prepare statements that could be compared.
Each company would have to develop its own standards.
Readers of financial statements would have to familiarize themselves with every company's
peculiar accounting and reporting practices.
All of these answer choices are correct. - CORRECT ANSWER✔✔- All of these answer
choices are correct.
The American Institute of Certified Public Accountants (AICPA) continues to be involved in
all of the following except
developing auditing standards for public companies.
providing professional education programs.
grading the CPA exam.
developing and enforcing professional ethics. - CORRECT ANSWER✔✔- developing
auditing standards for public companies.
What is not due process in the context of standard setting at the FASB?
Interested parties can make their views known.
No public hearings are held on proposed accounting standards.
Public hearings are held on proposed accounting standards.
The FASB operates in full view of the public. - CORRECT ANSWER✔✔- No public
hearings are held on proposed accounting standards.
,A company has a factory building that originally cost the company $250,000. The current fair
value of the factory building is $3 million. The president would like to report the difference
as a gain. The write-up would represent a violation of which accounting assumption or
principle?
Revenue recognition
Monetary unit
Going concern
Historical cost - CORRECT ANSWER✔✔- Historical cost
Which of the following is a constraint in presenting financial information?
Relevance
Consistency
Full disclosure
Cost - CORRECT ANSWER✔✔- Cost
Materiality is used in all of the following situations of providing financial information, except
where omission of the information would result in bias.
where an amount is of relative large size and importance.
where it would not make a difference in the actions of a decision maker.
where it would impact the judgment of a reasonable person. - CORRECT ANSWER✔✔-
where it would not make a difference in the actions of a decision maker.
What is prudence or conservatism?
When in doubt, recognizing the option that is least likely to overstate assets and income
Recognizing the option that is least likely to overstate assets and income
Recognizing revenue when earned and realized
Understating assets and net income - CORRECT ANSWER✔✔- When in doubt, recognizing
the option that is least likely to overstate assets and income
In classifying the elements of financial statements, the primary distinction between revenues
and gains is
the costs versus the benefits of the alternative methods of disclosing the transactions
involved.
the likelihood that the transactions involved will recur in the future.
the materiality of the amounts involved.
the nature of the activities that gave rise to the transactions involved. - CORRECT
ANSWER✔✔- the nature of the activities that gave rise to the transactions involved.
, Changing the method of inventory valuation should be reported in the financial statements
because of which qualitative characteristic of accounting information?
Consistency
Comparability
Verifiability
Timeliness - CORRECT ANSWER✔✔- Consistency
The underlying theme of the conceptual framework is
comparability.
faithful representation.
decision usefulness.
understandability. - CORRECT ANSWER✔✔- decision usefulness.
The objective of general-purpose financial reporting is?
to provide users with financial information that implies total freedom from error
to provide financial information about the reporting entity that is useful to present and
potential equity investors, lenders, and other creditors in making decisions in their capacity as
capital providers
to provide a metric for financial information used to determine when the boundary between
two or more entities should be disregarded and the entities considered to be a licensing
arrangement
to provide companies with the option to select information that favors one set of interested
parties over another - CORRECT ANSWER✔✔- to provide financial information about the
reporting entity that is useful to present and potential equity investors, lenders, and other
creditors in making decisions in their capacity as capital providers
What is a purpose of having a conceptual framework?
To enable the profession to more quickly solve emerging practical problems and to provide a
foundation from which to build more useful standards.
To make sure that economic activity can be identified with a particular legal entity.
To segregate activities among different companies.
To provide comparable information for different companies. - CORRECT ANSWER✔✔- To
enable the profession to more quickly solve emerging practical problems and to provide a
foundation from which to build more useful standards.
Accounting information is considered to be relevant when it
is verifiable and neutral.
is capable of making a difference in a decision.
