Accounting Crash Course Exam Questions
with correct answers
Accounting |is |important |for |- |VERIFIED |ANSWER✔✔-firm's |officers, |investors, |lenders, |and |the |general
|public
Generally |Accepted |Accounting |Principles |(GAAP) |- |VERIFIED |ANSWER✔✔-a |set |of |accounting |
standards |that |is |used |in |the |preparation |of |financial |statements
Securities |and |Exchange |Commission |(SEC) |- |VERIFIED |ANSWER✔✔--division |of |corporate |finance: |
oversees |financial |reporting |by |corporations
Financial |Accounting |Standards |Board |(FASB) |- |VERIFIED |ANSWER✔✔-Types |of |pronouncements:
-Statements |of |Financial |Accounting |Standards
-Interpretations
-Financial |Accounting |Concepts
-Emerging |Issues |Task |Force |Statements
International |Financial |Reporting |Standards |(IFRS) |- |VERIFIED |ANSWER✔✔-unified |set |of |international |
accounting |standards
Assumption |1: |Accounting |Entity |- |VERIFIED |ANSWER✔✔--a |company |is |considered |a |separate |"living"
|enterprise |apart |from |its |owners
-it |is |engaged |in |clearly-defined |activities
-regularly |reports |its |financial |health |to |the |general |publics
-pays |taxes |and |can |file |lawsuits
Assumption |2: |Going |Concern |- |VERIFIED |ANSWER✔✔--a |corporation |is |assumed |to |remain |in |
existence |indefinitely
-assets |and |liabilities |are |recognized |values |that |assume |the |company |will |not |have |to |sell |them |at |
liquidation
,Assumption |3: |Measurement |- |VERIFIED |ANSWER✔✔--financial |statements |must |be |reported |in |the |
national |monetary |unit
-can |only |show |measurable |activities |of |a |corporation
Assumption |4: |Periodicity |- |VERIFIED |ANSWER✔✔--companies |are |required |to |file |annual |and |interim |
reports
-a |fiscal |year |is |frequently |but |not |always |aligned |with |the |calendar |year
Principle |1: |Historical |Cost |- |VERIFIED |ANSWER✔✔--financial |statements |report |companies' |resources |
at |an |initial |historical |cost
-represents |the |easiest |measurement |method |without |a |need |a |for |appraisal |and |revaluation
-minimized |management |discretion |and |subjectivity
-IFRS |is |more |willing |to |allow |this |subjectivity |to |avoid |misrepresenting |the |true |value |of |assets
Principle |2: |Revenue |Recognition |- |VERIFIED |ANSWER✔✔-accrual |basis |of |accounting |dictates |that |
revenues |must |be |recorded |when |earned |and |measurable
-cannot |be |recorded |until |the |order |is |shipped |to |a |customer |and |collection |from |that |customer |(who
|uses |a |credit |card) |is |reasonably |assured
Principle |3: |Matching |Principle |- |VERIFIED |ANSWER✔✔-costs |associated |with |making |a |product |must |
be |recorded |during |the |same |period |as |revenue |generated |from |that |product
Principle |4: |Full |Disclosure |- |VERIFIED |ANSWER✔✔-companies |must |reveal |all |relevant |economic |
information |that |they |determine |to |make |a |difference |to |its |users
-should |be |accomplished |in: |financial |statements, |notes |to |financial |statements, |and |supplementary |
information
Contraint |1: |Estimates |& |Judgements |- |VERIFIED |ANSWER✔✔-certain |measurements |cannot |be |
performed |completely |accurately |and |must |therefore |utilize |conservative |estimates |and |judgements
,Constraint |2: |Materiality |- |VERIFIED |ANSWER✔✔-inclusion |and |disclosure |of |financial |transactions |in |
financial |statements |hinge |on |their |size |and |effect |on |the |company |performing |them
-materiality |varies |across |different |entities
Constraint |3: |Consistency |- |VERIFIED |ANSWER✔✔-for |each |company, |the |preparation |financial |
statements |must |utilize |measurement |techniques |and |assumptions |which |are |consistent |from |one |
period |to |another
Constraint |4: |Conservatism |- |VERIFIED |ANSWER✔✔-financial |statements |should |be |prepared |with |a |
downward |measurement |bias
-assets |and |revenues |should |not |be |overstates, |while |liabilities |and |expenses |should |not |be |
understated
Form |10-K |- |VERIFIED |ANSWER✔✔--required |annual |filing
-must |be |filed |within |60-90 |days |within |year |end
-provides |the |most |detailed |overview |of |companies' |financial |operations |and |regulations |governing |
them
Form |10-Q |- |VERIFIED |ANSWER✔✔--publicly-traded |companies |file |a |quarterly |report |with |the |SEC |for
|the |first |three |quarters
-must |be |filed |within |40-45 |days |of |quarter |end
10-K |vs. |10-Q |- |VERIFIED |ANSWER✔✔--10-K's |are |more |detailed
-10-K |reports |are |audited |by |an |independent |firm |while |10-Q |filings |are |reviewed |by |a |CPA |but |are |
unaudited
Form |8-K |- |VERIFIED |ANSWER✔✔-required |filing |any |time |a |company |undergoes |or |announces |a |
materially |significant |event |such |as |a |n |earnings |press |release, |an |acquisition, |a |disposal |of |assets, |
bankruptcy, |etc.
-usually |filed |within |4 |days |of |the |event
Form |14A |(Proxy |Statement) |- |VERIFIED |ANSWER✔✔--required |filing |prior |to |companies' |annual |
shareholder |meetings
, -contains |detailed |information |about |top |officers |and |their |compensations
Important |Sections |of |the |10-K |- |VERIFIED |ANSWER✔✔--Item |6: |selected |financial |data
-Item |7: |Management's |Discussion |and |Analysis |of |Financial |Condition |and |Results |of |Operations
-Item |8: |Financial |Statements |and |Supplementary |Data
The |regulating |body |that |oversees |the |development |of |accounting |standards |in |the |U.S. |is: |- |VERIFIED
|ANSWER✔✔-FASB
FASB |formulates |accounting |standards |through |the |issuance |of |Statements |of |Financial |Accounting |
Standards |(SFAS). |These |statements |make |up |the |body |of |accounting |rules |known |as |the |Generally |
Accepted |Accounting |Principles |(GAAP). |IASB |oversees |international |financial |reporting |standards |
(IFRS).
Which |of |the |following |statements |is |TRUE? |- |VERIFIED |ANSWER✔✔-GAAP |requires |that |firms |show |
recorded |values |for |acquired |intangible |assets |such |as |patents |and |trademarks |on |their |financial |
statements
GAAP |requires |that |firms |only |show |measurable |activities, |such |as |the |value |of |acquired |intangible |
assets. |Assets |such |as |employee, |customer |loyalty |and |internally-developed |trademarks |are |not |
shown |on |financial |statements |because |they're |difficult |to |quantify.
Which |of |the |following |statements |is |TRUE? |- |VERIFIED |ANSWER✔✔-Publicly |traded |US |companies |
are |required |to |file |three |10-Q's |and |one |10-K |annually.
Publicly-traded |US |companies |must |file |three |quarterly |(10-Q) |reports |at |the |end |of |their |1Q, |2Q |and |
3Q, |and |a |10-K |at |the |end |of |their |fiscal |year.
The |income |statement |is |designed |to |measure: |- |VERIFIED |ANSWER✔✔-The |profits |of |a |firm |over |a |
period |of |time.
The |income |statement |is |designed |to |show |the |profitability |of |a |business |(revenues |less |expenses) |
over |a |period |of |time |(usually |a |quarter |or |year). |The |income |statement |is |an |accrual |measure |of |
with correct answers
Accounting |is |important |for |- |VERIFIED |ANSWER✔✔-firm's |officers, |investors, |lenders, |and |the |general
|public
Generally |Accepted |Accounting |Principles |(GAAP) |- |VERIFIED |ANSWER✔✔-a |set |of |accounting |
standards |that |is |used |in |the |preparation |of |financial |statements
Securities |and |Exchange |Commission |(SEC) |- |VERIFIED |ANSWER✔✔--division |of |corporate |finance: |
oversees |financial |reporting |by |corporations
Financial |Accounting |Standards |Board |(FASB) |- |VERIFIED |ANSWER✔✔-Types |of |pronouncements:
-Statements |of |Financial |Accounting |Standards
-Interpretations
-Financial |Accounting |Concepts
-Emerging |Issues |Task |Force |Statements
International |Financial |Reporting |Standards |(IFRS) |- |VERIFIED |ANSWER✔✔-unified |set |of |international |
accounting |standards
Assumption |1: |Accounting |Entity |- |VERIFIED |ANSWER✔✔--a |company |is |considered |a |separate |"living"
|enterprise |apart |from |its |owners
-it |is |engaged |in |clearly-defined |activities
-regularly |reports |its |financial |health |to |the |general |publics
-pays |taxes |and |can |file |lawsuits
Assumption |2: |Going |Concern |- |VERIFIED |ANSWER✔✔--a |corporation |is |assumed |to |remain |in |
existence |indefinitely
-assets |and |liabilities |are |recognized |values |that |assume |the |company |will |not |have |to |sell |them |at |
liquidation
,Assumption |3: |Measurement |- |VERIFIED |ANSWER✔✔--financial |statements |must |be |reported |in |the |
national |monetary |unit
-can |only |show |measurable |activities |of |a |corporation
Assumption |4: |Periodicity |- |VERIFIED |ANSWER✔✔--companies |are |required |to |file |annual |and |interim |
reports
-a |fiscal |year |is |frequently |but |not |always |aligned |with |the |calendar |year
Principle |1: |Historical |Cost |- |VERIFIED |ANSWER✔✔--financial |statements |report |companies' |resources |
at |an |initial |historical |cost
-represents |the |easiest |measurement |method |without |a |need |a |for |appraisal |and |revaluation
-minimized |management |discretion |and |subjectivity
-IFRS |is |more |willing |to |allow |this |subjectivity |to |avoid |misrepresenting |the |true |value |of |assets
Principle |2: |Revenue |Recognition |- |VERIFIED |ANSWER✔✔-accrual |basis |of |accounting |dictates |that |
revenues |must |be |recorded |when |earned |and |measurable
-cannot |be |recorded |until |the |order |is |shipped |to |a |customer |and |collection |from |that |customer |(who
|uses |a |credit |card) |is |reasonably |assured
Principle |3: |Matching |Principle |- |VERIFIED |ANSWER✔✔-costs |associated |with |making |a |product |must |
be |recorded |during |the |same |period |as |revenue |generated |from |that |product
Principle |4: |Full |Disclosure |- |VERIFIED |ANSWER✔✔-companies |must |reveal |all |relevant |economic |
information |that |they |determine |to |make |a |difference |to |its |users
-should |be |accomplished |in: |financial |statements, |notes |to |financial |statements, |and |supplementary |
information
Contraint |1: |Estimates |& |Judgements |- |VERIFIED |ANSWER✔✔-certain |measurements |cannot |be |
performed |completely |accurately |and |must |therefore |utilize |conservative |estimates |and |judgements
,Constraint |2: |Materiality |- |VERIFIED |ANSWER✔✔-inclusion |and |disclosure |of |financial |transactions |in |
financial |statements |hinge |on |their |size |and |effect |on |the |company |performing |them
-materiality |varies |across |different |entities
Constraint |3: |Consistency |- |VERIFIED |ANSWER✔✔-for |each |company, |the |preparation |financial |
statements |must |utilize |measurement |techniques |and |assumptions |which |are |consistent |from |one |
period |to |another
Constraint |4: |Conservatism |- |VERIFIED |ANSWER✔✔-financial |statements |should |be |prepared |with |a |
downward |measurement |bias
-assets |and |revenues |should |not |be |overstates, |while |liabilities |and |expenses |should |not |be |
understated
Form |10-K |- |VERIFIED |ANSWER✔✔--required |annual |filing
-must |be |filed |within |60-90 |days |within |year |end
-provides |the |most |detailed |overview |of |companies' |financial |operations |and |regulations |governing |
them
Form |10-Q |- |VERIFIED |ANSWER✔✔--publicly-traded |companies |file |a |quarterly |report |with |the |SEC |for
|the |first |three |quarters
-must |be |filed |within |40-45 |days |of |quarter |end
10-K |vs. |10-Q |- |VERIFIED |ANSWER✔✔--10-K's |are |more |detailed
-10-K |reports |are |audited |by |an |independent |firm |while |10-Q |filings |are |reviewed |by |a |CPA |but |are |
unaudited
Form |8-K |- |VERIFIED |ANSWER✔✔-required |filing |any |time |a |company |undergoes |or |announces |a |
materially |significant |event |such |as |a |n |earnings |press |release, |an |acquisition, |a |disposal |of |assets, |
bankruptcy, |etc.
-usually |filed |within |4 |days |of |the |event
Form |14A |(Proxy |Statement) |- |VERIFIED |ANSWER✔✔--required |filing |prior |to |companies' |annual |
shareholder |meetings
, -contains |detailed |information |about |top |officers |and |their |compensations
Important |Sections |of |the |10-K |- |VERIFIED |ANSWER✔✔--Item |6: |selected |financial |data
-Item |7: |Management's |Discussion |and |Analysis |of |Financial |Condition |and |Results |of |Operations
-Item |8: |Financial |Statements |and |Supplementary |Data
The |regulating |body |that |oversees |the |development |of |accounting |standards |in |the |U.S. |is: |- |VERIFIED
|ANSWER✔✔-FASB
FASB |formulates |accounting |standards |through |the |issuance |of |Statements |of |Financial |Accounting |
Standards |(SFAS). |These |statements |make |up |the |body |of |accounting |rules |known |as |the |Generally |
Accepted |Accounting |Principles |(GAAP). |IASB |oversees |international |financial |reporting |standards |
(IFRS).
Which |of |the |following |statements |is |TRUE? |- |VERIFIED |ANSWER✔✔-GAAP |requires |that |firms |show |
recorded |values |for |acquired |intangible |assets |such |as |patents |and |trademarks |on |their |financial |
statements
GAAP |requires |that |firms |only |show |measurable |activities, |such |as |the |value |of |acquired |intangible |
assets. |Assets |such |as |employee, |customer |loyalty |and |internally-developed |trademarks |are |not |
shown |on |financial |statements |because |they're |difficult |to |quantify.
Which |of |the |following |statements |is |TRUE? |- |VERIFIED |ANSWER✔✔-Publicly |traded |US |companies |
are |required |to |file |three |10-Q's |and |one |10-K |annually.
Publicly-traded |US |companies |must |file |three |quarterly |(10-Q) |reports |at |the |end |of |their |1Q, |2Q |and |
3Q, |and |a |10-K |at |the |end |of |their |fiscal |year.
The |income |statement |is |designed |to |measure: |- |VERIFIED |ANSWER✔✔-The |profits |of |a |firm |over |a |
period |of |time.
The |income |statement |is |designed |to |show |the |profitability |of |a |business |(revenues |less |expenses) |
over |a |period |of |time |(usually |a |quarter |or |year). |The |income |statement |is |an |accrual |measure |of |
