ACCOUNTING CRASH COURSE EXAM V4 FROM WALL
STREET PREP ACTUAL EXAM QUESTIONS AND
CORRECT ANSWERS GRADED A+|| LATEST UPDATE
2025/26
Accounting is important for -CORRECTANSWER firm's officers, investors, lenders, and
the general public
Generally Accepted Accounting Principles (GAAP) -CORRECTANSWER a set of
accounting standards that is used in the preparation of financial statements
Securities and Exchange Commission (SEC) -CORRECTANSWER -division of
corporate finance: oversees financial reporting by corporations
Financial Accounting Standards Board (FASB) -CORRECTANSWER Types of
pronouncements:
-Statements of Financial Accounting Standards
-Interpretations
-Financial Accounting Concepts
-Emerging Issues Task Force Statements
International Financial Reporting Standards (IFRS) -CORRECTANSWER unified set of
international accounting standards
,Assumption 1: Accounting Entity -CORRECTANSWER -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 -CORRECTANSWER -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 -CORRECTANSWER -financial statements must be
reported in the national monetary unit
-can only show measurable activities of a corporation
Assumption 4: Periodicity -CORRECTANSWER -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 -CORRECTANSWER -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 -CORRECTANSWER 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 -CORRECTANSWER costs associated with making a
product must be recorded during the same period as revenue generated from that
product
Principle 4: Full Disclosure -CORRECTANSWER 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 -CORRECTANSWER certain measurements
cannot be performed completely accurately and must therefore utilize conservative
estimates and judgements
, Constraint 2: Materiality -CORRECTANSWER 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 -CORRECTANSWER for each company, the preparation
financial statements must utilize measurement techniques and assumptions which are
consistent from one period to another
Constraint 4: Conservatism -CORRECTANSWER 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 -CORRECTANSWER -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 -CORRECTANSWER -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
STREET PREP ACTUAL EXAM QUESTIONS AND
CORRECT ANSWERS GRADED A+|| LATEST UPDATE
2025/26
Accounting is important for -CORRECTANSWER firm's officers, investors, lenders, and
the general public
Generally Accepted Accounting Principles (GAAP) -CORRECTANSWER a set of
accounting standards that is used in the preparation of financial statements
Securities and Exchange Commission (SEC) -CORRECTANSWER -division of
corporate finance: oversees financial reporting by corporations
Financial Accounting Standards Board (FASB) -CORRECTANSWER Types of
pronouncements:
-Statements of Financial Accounting Standards
-Interpretations
-Financial Accounting Concepts
-Emerging Issues Task Force Statements
International Financial Reporting Standards (IFRS) -CORRECTANSWER unified set of
international accounting standards
,Assumption 1: Accounting Entity -CORRECTANSWER -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 -CORRECTANSWER -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 -CORRECTANSWER -financial statements must be
reported in the national monetary unit
-can only show measurable activities of a corporation
Assumption 4: Periodicity -CORRECTANSWER -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 -CORRECTANSWER -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 -CORRECTANSWER 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 -CORRECTANSWER costs associated with making a
product must be recorded during the same period as revenue generated from that
product
Principle 4: Full Disclosure -CORRECTANSWER 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 -CORRECTANSWER certain measurements
cannot be performed completely accurately and must therefore utilize conservative
estimates and judgements
, Constraint 2: Materiality -CORRECTANSWER 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 -CORRECTANSWER for each company, the preparation
financial statements must utilize measurement techniques and assumptions which are
consistent from one period to another
Constraint 4: Conservatism -CORRECTANSWER 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 -CORRECTANSWER -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 -CORRECTANSWER -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
