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INTERMEDIATE FINANCIAL
ACCOUNTING EXAM QUESTIONS AND
ANSWERS 100% PASS
What information is included in the annual report letter written by managers of publicly traded
companies? - ANS The annual report of a publicly traded entity must include a letter from
the firm's management that states its responsibilities for the operations of the entity and the
information contained in the financial statements, including: designing and implementing
internal controls relevant to the preparation and fair presentation of financial statements that
are free from material misstatement, whether due to fraud or error; selecting and applying
appropriate accounting policies; and making accounting estimates that are reasonable in the
circumstances.
What do auditors attest to in a auditors report? - ANS The audit report attests to the fairness
of the financial statements, not the annual report. The auditor, though, verifies that the
financial information in the annual report is not inconsistent with the financial statements.
Why are the notes to the financial statements an integral part of the financial statements? -
ANS The notes (or footnotes) to the financial statements provide descriptive information
regarding a company's accounting policies, supplemental disclosures of items not reported on
the financial statements, and additional detail for transactions reported on the four main
financial statements. For example, a company will disclose its depreciation policy for long-lived
assets in its financial statement footnotes. A company could also provide additional disclosures
on the historical cost and accumulated depreciation by significant types of assets. Notes to the
financial statements are typically extensive.
Accounts payable is a - ANS liability, (current liability)
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Trademark is an - ANS noncurrent asset (intangible asset)
cash is an - ANS asset (current)
income tax payable is an - ANS liability (current liability)
tractors are an - ANS asset (property, plant & equipment)
common stock is - ANS stockholders equity
accounts receivable is an - ANS current asset
retained earnings is - ANS stockholders equity
The statement of financial position also called the ______________________________, lists an
entity's ___________, _______________, and ___________________________ as of a specific
point in time - ANS balance sheet... assets, liabilities, and equity
the balance sheet consists of __________ - ANS permanent accounts with cumulative
balances that company carries forward period to period over the life of the firm
3 things the balance sheet does.... - ANS 1. Summarizes the economic resources obligations
that impact the entity's ability to generate future cash flows
2. is useful in assessing an entity's rate of return on its investments when examined in
conjunction with the income statement
3. Aids in assessing the risk associated with a entity by providing inputs for cash flow measures
INTERMEDIATE FINANCIAL
ACCOUNTING EXAM QUESTIONS AND
ANSWERS 100% PASS
What information is included in the annual report letter written by managers of publicly traded
companies? - ANS The annual report of a publicly traded entity must include a letter from
the firm's management that states its responsibilities for the operations of the entity and the
information contained in the financial statements, including: designing and implementing
internal controls relevant to the preparation and fair presentation of financial statements that
are free from material misstatement, whether due to fraud or error; selecting and applying
appropriate accounting policies; and making accounting estimates that are reasonable in the
circumstances.
What do auditors attest to in a auditors report? - ANS The audit report attests to the fairness
of the financial statements, not the annual report. The auditor, though, verifies that the
financial information in the annual report is not inconsistent with the financial statements.
Why are the notes to the financial statements an integral part of the financial statements? -
ANS The notes (or footnotes) to the financial statements provide descriptive information
regarding a company's accounting policies, supplemental disclosures of items not reported on
the financial statements, and additional detail for transactions reported on the four main
financial statements. For example, a company will disclose its depreciation policy for long-lived
assets in its financial statement footnotes. A company could also provide additional disclosures
on the historical cost and accumulated depreciation by significant types of assets. Notes to the
financial statements are typically extensive.
Accounts payable is a - ANS liability, (current liability)
, ©THESTAR 2025 ALL RIGHTS RESERVED
Trademark is an - ANS noncurrent asset (intangible asset)
cash is an - ANS asset (current)
income tax payable is an - ANS liability (current liability)
tractors are an - ANS asset (property, plant & equipment)
common stock is - ANS stockholders equity
accounts receivable is an - ANS current asset
retained earnings is - ANS stockholders equity
The statement of financial position also called the ______________________________, lists an
entity's ___________, _______________, and ___________________________ as of a specific
point in time - ANS balance sheet... assets, liabilities, and equity
the balance sheet consists of __________ - ANS permanent accounts with cumulative
balances that company carries forward period to period over the life of the firm
3 things the balance sheet does.... - ANS 1. Summarizes the economic resources obligations
that impact the entity's ability to generate future cash flows
2. is useful in assessing an entity's rate of return on its investments when examined in
conjunction with the income statement
3. Aids in assessing the risk associated with a entity by providing inputs for cash flow measures
