Accounting Crash Course Exam 2025 Questions And Answers

ACCOUNTING CRASH COURSE EXAM
2025 QUESTIONS AND ANSWERS




Accounting is important for - ANS firm's officers, investors, lenders, and the general public



Generally Accepted Accounting Principles (GAAP) - ANS a set of accounting standards that is
used in the preparation of financial statements



Securities and Exchange Commission (SEC) - ANS -division of corporate finance: oversees
financial reporting by corporations



Financial Accounting Standards Board (FASB) - ANS Types of pronouncements:
-Statements of Financial Accounting Standards
-Interpretations
-Financial Accounting Concepts
-Emerging Issues Task Force Statements



International Financial Reporting Standards (IFRS) - ANS unified set of international
accounting standards



Assumption 1: Accounting Entity - ANS -a company is considered a separate "living"
enterprise apart from its owners
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-it is engaged in clearly-defined activities
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, -regularly reports its financial health to the general publics
-pays taxes and can file lawsuits



Assumption 2: Going Concern - ANS -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 - ANS -financial statements must be reported in the national
monetary unit
-can only show measurable activities of a corporation



Assumption 4: Periodicity - ANS -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 - ANS -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 - ANS 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 - ANS costs associated with making a product must be
recorded during the same period as revenue generated from that product
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, Principle 4: Full Disclosure - ANS 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 - ANS certain measurements cannot be performed
completely accurately and must therefore utilize conservative estimates and judgements



Constraint 2: Materiality - ANS 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 - ANS for each company, the preparation financial statements
must utilize measurement techniques and assumptions which are consistent from one period to
another



Constraint 4: Conservatism - ANS 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 - ANS -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 - ANS -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
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, 10-K vs. 10-Q - ANS -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 - ANS 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) - ANS -required filing prior to companies' annual shareholder
meetings
-contains detailed information about top officers and their compensations



Important Sections of the 10-K - ANS -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: -
ANS 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? - ANS GAAP requires that firms show recorded
values for acquired intangible assets such as patents and trademarks on their financial
statements
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