A201 Financial Accounting Exam 1
Questions And Answers
Accrual accounting requires that wages owed to employees at the end of the month are to ...
be recorded as an expense in the month in which they worked, regardless of if they're not
yet paid
Marketable securities fall under which category on the balance sheet? Assets
economic entity assumption says that the information on the company's financial
statement does not include the shareholders' personal assets and liabilities
the going concern assumption says that a business will continue indefinitely in the future
the stable dollar assumption says that the reports will be in US dollars and it is stable
the fiscal period assumption says that the statements are broken up into time periods
the measurement principle (objectivity) measures items on balance sheets
(agree on all, can have different values for each category)
, A201 Financial Accounting Exam 1
Questions And Answers
revenue recognition principle (accrual accounting) revenue is recorded when earned
(match up revenues and expenses)
expense recognition principle
(accrual accounting) expenses recorded when incurred
(match up revenues and expenses)
full disclosure principle provide enough information for people to understand what is
going on in the financial statements
ex. N/P $1,000,000 says its due in 10 years versus 1 year - can make a big impact
Materiality changes the view of financial statement
ex. if sales were listed incorrectly for one year and the difference was 100,000 versus if the
difference was 100, it can change your view on the company
conservatism situation when you don't know how to account for it- gives you the most
conservative result
Questions And Answers
Accrual accounting requires that wages owed to employees at the end of the month are to ...
be recorded as an expense in the month in which they worked, regardless of if they're not
yet paid
Marketable securities fall under which category on the balance sheet? Assets
economic entity assumption says that the information on the company's financial
statement does not include the shareholders' personal assets and liabilities
the going concern assumption says that a business will continue indefinitely in the future
the stable dollar assumption says that the reports will be in US dollars and it is stable
the fiscal period assumption says that the statements are broken up into time periods
the measurement principle (objectivity) measures items on balance sheets
(agree on all, can have different values for each category)
, A201 Financial Accounting Exam 1
Questions And Answers
revenue recognition principle (accrual accounting) revenue is recorded when earned
(match up revenues and expenses)
expense recognition principle
(accrual accounting) expenses recorded when incurred
(match up revenues and expenses)
full disclosure principle provide enough information for people to understand what is
going on in the financial statements
ex. N/P $1,000,000 says its due in 10 years versus 1 year - can make a big impact
Materiality changes the view of financial statement
ex. if sales were listed incorrectly for one year and the difference was 100,000 versus if the
difference was 100, it can change your view on the company
conservatism situation when you don't know how to account for it- gives you the most
conservative result
