WSP Accounting | ACTUAL EXAM QUESTIONS
WITH ANSWERS VERIFIED 100% CORRECT
Why can't companies immediately record these revenues and expenses?
According to the revenue recognition principle, a company cannot record revenue until
that order is shipped to a customer. Only then, is the revenue earned
Historical Cost
The actual amount paid for merchandise or other items bought is recorded
Full Disclosure
Companies must reveal all relevant economic information that they determine to make
a difference to its users.
Why is the 10-K important?
Provides the most detailed overview of companies' financial operations and regulations
governing them
A 10-K will usually contain more details regarding stock options, fixed and intangible
assets, debt, and future expectations
True
An independent firm audits 10-Q reports, while a CPA reviews 10-K filings that are
unaudited.
False
The regulating body that oversees the development of accounting standards in the
U.S. is:
FASB (Financial Accounting Standards Board)
, The income statement is designed to measure:
The profits of a firm over a period of time.
The "matching principle" states that:
Costs associated with making a product must be recognized during the same period as
revenue generated from that product.
Why is the IS important?
It shows the overall operating performance of a company over a specific period. It can
also be used to help analysts analyze the sources of a company's net earnings
Net Revenues
Total dollar payment for goods and services that are credited to an income statement
over a particular time period
COGS
a company's direct cost of manufacture or procurement of a good or service that the
company sells to generate revenue.
Gross Profit
Revenues - COGS
SG&A
Operating costs not directly associated with the production or procurement of the
product or service that the company sells to generate revenue. Payroll, wages,
commissions, meal and travel expenses, stationary, advertising
R&D
A company's activities that are directed at developing new products or procedures
WITH ANSWERS VERIFIED 100% CORRECT
Why can't companies immediately record these revenues and expenses?
According to the revenue recognition principle, a company cannot record revenue until
that order is shipped to a customer. Only then, is the revenue earned
Historical Cost
The actual amount paid for merchandise or other items bought is recorded
Full Disclosure
Companies must reveal all relevant economic information that they determine to make
a difference to its users.
Why is the 10-K important?
Provides the most detailed overview of companies' financial operations and regulations
governing them
A 10-K will usually contain more details regarding stock options, fixed and intangible
assets, debt, and future expectations
True
An independent firm audits 10-Q reports, while a CPA reviews 10-K filings that are
unaudited.
False
The regulating body that oversees the development of accounting standards in the
U.S. is:
FASB (Financial Accounting Standards Board)
, The income statement is designed to measure:
The profits of a firm over a period of time.
The "matching principle" states that:
Costs associated with making a product must be recognized during the same period as
revenue generated from that product.
Why is the IS important?
It shows the overall operating performance of a company over a specific period. It can
also be used to help analysts analyze the sources of a company's net earnings
Net Revenues
Total dollar payment for goods and services that are credited to an income statement
over a particular time period
COGS
a company's direct cost of manufacture or procurement of a good or service that the
company sells to generate revenue.
Gross Profit
Revenues - COGS
SG&A
Operating costs not directly associated with the production or procurement of the
product or service that the company sells to generate revenue. Payroll, wages,
commissions, meal and travel expenses, stationary, advertising
R&D
A company's activities that are directed at developing new products or procedures
