WSP Accounting Exam Questions and Correct Answers Latest Update 2025
What is accounting? - Answers Standard way of reporting a business' performance
Generally accepted accounting principles (GAAP) - Answers A standardized set of rules for company
repoprting
Who governs the FASB (Financial Accounting standards board) - Answers Securities and Exchange
Commission (SEC)
What is SFAS? - Answers Statements of financial accounting standards
How are FASB and SFAS connected? - Answers FASB communicates rules through SFAS which makes
GAAP
How is the FASB structured? - Answers Governed by people who are appointed, supposed to act
independently
What is the IFRS? - Answers International Financial Reporting Standards- they determine rules for
international reporting
Accounting Assumption #1 - Answers Accounting entity- The company is its own entity seperate from its
owners and therefore can report its health to the general public, pay taxes, sue, etc
Accounting Assumption #2 - Answers The firm is a going concern- the firm should report their financials
like they will be going on indefinitely
Accounting Assumption #3 - Answers Measurement- Firm should report their financial statements
monetarily so things like customer loyalty and customer satisfaction aren't reported
Accounting Assumption #4 - Answers Periodicity- Many companies are required to report quarterly and
annually
Accounting Principle #1 - Answers Companies should report company's resources at the historical cost
because it can be difficult to appraise value
Accounting Principle #2 - Answers Accrual accounting dictates when you recognize revenue and
expenses
Revenue recognition must be recorded when earned and measurable
Accounting Principle #3 - Answers Matching principle- costs associated with making a product must be
reported during the same time as the revenue generated from said product
Accounting Principle #4 - Answers Full disclosure- companies must reveal all relevant economic
information that they determine is relevant
, Major accounting restraints #1 - Answers Estimates and judgements- certain measures cant be
performed accurately so companies should use conservative estimates
Major accounting restraints #2 - Answers Materiality- you have to present things that are material- this
is determined by the size of the firm.
I.e. a hundred thousand dollar loan wouldn't be reported by apple but would be by a smaller company
Major accounting restraints #3 - Answers consistency- each company has to prepare financial
statements using a consistent set of assumptions and techniques
Major accounting restraints #4 - Answers Conservatism- financial statements should always be reported
with a downward bias meaning conservative estimates
10k - Answers Annual filing published at the end of the fiscal year that covers the company's finances
and business
when does a 10k have to be filed? - Answers Within 60-90 days of end of fiscal year
10Q - Answers quarterly filing that are less detailed
Why should you be skeptical of 10qs - Answers they are reviewed, but not audited by CPAs
8k - Answers Report filed immediately (72 hours) after material item is going to effect stock price`
14a - Answers Proxy Statement: tells you about the management team, board of directors, the CPA firm.
Used to vote on these people. It tells you how much someone is making
s-1 - Answers filed when company decides to go public
s-4 - Answers filed when company is public
20f - Answers annual filing for companies that have foreign securities trading
Income statement - Answers A financial statement showing the revenue and expenses for a fiscal
period.
Net revenue - Answers On income statement, shows total payment for goods and services that are
accredited
COGS - Answers On Income statement, companies direct cost for manufacturing goods and services
Gross Profit - Answers income statement- Revenue-COGS
Selling, General, and Administrative Expenses - Answers income statement- operating expenses that
aren't directly related to producing goods and services like payroll, travel, etc
What is accounting? - Answers Standard way of reporting a business' performance
Generally accepted accounting principles (GAAP) - Answers A standardized set of rules for company
repoprting
Who governs the FASB (Financial Accounting standards board) - Answers Securities and Exchange
Commission (SEC)
What is SFAS? - Answers Statements of financial accounting standards
How are FASB and SFAS connected? - Answers FASB communicates rules through SFAS which makes
GAAP
How is the FASB structured? - Answers Governed by people who are appointed, supposed to act
independently
What is the IFRS? - Answers International Financial Reporting Standards- they determine rules for
international reporting
Accounting Assumption #1 - Answers Accounting entity- The company is its own entity seperate from its
owners and therefore can report its health to the general public, pay taxes, sue, etc
Accounting Assumption #2 - Answers The firm is a going concern- the firm should report their financials
like they will be going on indefinitely
Accounting Assumption #3 - Answers Measurement- Firm should report their financial statements
monetarily so things like customer loyalty and customer satisfaction aren't reported
Accounting Assumption #4 - Answers Periodicity- Many companies are required to report quarterly and
annually
Accounting Principle #1 - Answers Companies should report company's resources at the historical cost
because it can be difficult to appraise value
Accounting Principle #2 - Answers Accrual accounting dictates when you recognize revenue and
expenses
Revenue recognition must be recorded when earned and measurable
Accounting Principle #3 - Answers Matching principle- costs associated with making a product must be
reported during the same time as the revenue generated from said product
Accounting Principle #4 - Answers Full disclosure- companies must reveal all relevant economic
information that they determine is relevant
, Major accounting restraints #1 - Answers Estimates and judgements- certain measures cant be
performed accurately so companies should use conservative estimates
Major accounting restraints #2 - Answers Materiality- you have to present things that are material- this
is determined by the size of the firm.
I.e. a hundred thousand dollar loan wouldn't be reported by apple but would be by a smaller company
Major accounting restraints #3 - Answers consistency- each company has to prepare financial
statements using a consistent set of assumptions and techniques
Major accounting restraints #4 - Answers Conservatism- financial statements should always be reported
with a downward bias meaning conservative estimates
10k - Answers Annual filing published at the end of the fiscal year that covers the company's finances
and business
when does a 10k have to be filed? - Answers Within 60-90 days of end of fiscal year
10Q - Answers quarterly filing that are less detailed
Why should you be skeptical of 10qs - Answers they are reviewed, but not audited by CPAs
8k - Answers Report filed immediately (72 hours) after material item is going to effect stock price`
14a - Answers Proxy Statement: tells you about the management team, board of directors, the CPA firm.
Used to vote on these people. It tells you how much someone is making
s-1 - Answers filed when company decides to go public
s-4 - Answers filed when company is public
20f - Answers annual filing for companies that have foreign securities trading
Income statement - Answers A financial statement showing the revenue and expenses for a fiscal
period.
Net revenue - Answers On income statement, shows total payment for goods and services that are
accredited
COGS - Answers On Income statement, companies direct cost for manufacturing goods and services
Gross Profit - Answers income statement- Revenue-COGS
Selling, General, and Administrative Expenses - Answers income statement- operating expenses that
aren't directly related to producing goods and services like payroll, travel, etc
