ACCOUNTING CRASH COURSE ACTUAL EXAM
2025/2026 BANK NEWEST FROM WALL STREET PREP
(WSP) TESTING VERSIONS AND A STUDY GUIDE |
EXPERT VERIFIED FOR GUARANTEED PASS
Accounting is important for - (ANSWER)firm's officers, investors, lenders, and the
general public
Generally Accepted Accounting Principles (GAAP) - (ANSWER)a set of accounting
standards that is used in the preparation of financial statements
Securities and Exchange Commission (SEC) - (ANSWER)-division of corporate
finance: oversees financial reporting by corporations
Financial Accounting Standards Board (FASB) - (ANSWER)Types of
pronouncements:
-Statements of Financial Accounting Standards
-Interpretations
-Financial Accounting Concepts
-Emerging Issues Task Force Statements
International Financial Reporting Standards (IFRS) - (ANSWER)unified set of
international accounting standards
,Assumption 1: Accounting Entity - (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 - (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 - (ANSWER)-financial statements must be reported
in the national monetary unit
-can only show measurable activities of a corporation
Assumption 4: Periodicity - (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 - (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 - (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 - (ANSWER)costs associated with making a
product must be recorded during the same period as revenue generated from
that product
Principle 4: Full Disclosure - (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 - (ANSWER)certain measurements cannot
be performed completely accurately and must therefore utilize conservative
estimates and judgements
Constraint 2: Materiality - (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 - (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 - (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 - (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 - (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 - (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
2025/2026 BANK NEWEST FROM WALL STREET PREP
(WSP) TESTING VERSIONS AND A STUDY GUIDE |
EXPERT VERIFIED FOR GUARANTEED PASS
Accounting is important for - (ANSWER)firm's officers, investors, lenders, and the
general public
Generally Accepted Accounting Principles (GAAP) - (ANSWER)a set of accounting
standards that is used in the preparation of financial statements
Securities and Exchange Commission (SEC) - (ANSWER)-division of corporate
finance: oversees financial reporting by corporations
Financial Accounting Standards Board (FASB) - (ANSWER)Types of
pronouncements:
-Statements of Financial Accounting Standards
-Interpretations
-Financial Accounting Concepts
-Emerging Issues Task Force Statements
International Financial Reporting Standards (IFRS) - (ANSWER)unified set of
international accounting standards
,Assumption 1: Accounting Entity - (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 - (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 - (ANSWER)-financial statements must be reported
in the national monetary unit
-can only show measurable activities of a corporation
Assumption 4: Periodicity - (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 - (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 - (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 - (ANSWER)costs associated with making a
product must be recorded during the same period as revenue generated from
that product
Principle 4: Full Disclosure - (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 - (ANSWER)certain measurements cannot
be performed completely accurately and must therefore utilize conservative
estimates and judgements
Constraint 2: Materiality - (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 - (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 - (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 - (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 - (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 - (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
