Acct 301 exam 1 practice
Which accounting assumption or principle is being violated if a company is a party to
major litigation that it may lose and decides not to include the information in the financial
statements because it may have a negative impact on the company's stock price?
a. Full disclosure.
b. Going concern.
c. Historical cost.
d. Expense recognition.
A
Recognition of amortization of an intangible asset illustrates which principle of
accounting?
a. Expense recognition
b. Full disclosure
c. Revenue recognition
d. Historical cost
A
Which assumption or principle requires that all information significant enough to affect
decisions of reasonably informed users should be reported in the financial statements?
a. Matching.
b. Going concern.
c. Historical cost.
d. Full disclosure.
D
A company has a factory building that originally cost the company $250,000. The current
fair value of the factory building is $3 million. The president would like to report the
difference as a gain. The write-up would represent a violation of which accounting
assumption or principle?
a. Revenue recognition
b. Going concern
c. Historical cost
d. Monetary unit
C
Which of the following is a constraint in presenting financial information?
a. Cost
b. Full disclosure
c. Relevance
d. Consistency
A
,All of the following represent costs of providing financial information except
a. processing/preparing.
b. disseminating.
c. accessing capital.
d. auditing.
C
Which of the following is a benefit of providing financial information?
a. Potential litigation
b. Auditing
c. Disclosure to competition
d. Improved allocation of resources
D
Materiality is used in all of the following situations of providing financial information,
except
a. where an amount is of relative large size and importance.
b. where it would impact the judgment of a reasonable person.
c. where it would not make a difference in the actions of a decision maker.
d. where omission of the information would result in bias.
C
. What is prudence or conservatism?
a. Understating assets and net income
b. When in doubt, recognizing the option that is least likely to overstate assets and
income
c. Recognizing the option that is least likely to overstate assets and income
d. Recognizing revenue when earned and realized
B
Expensing the cost of copy paper when the paper is acquired is an example
a. materiality.
b. expense recognition.
c. conservatism.
d. industry practices.
A
Which of the following statements concerning the cost-benefit relationship is not true?
a. Business reporting should exclude information outside of management's expertise.
b. Management should not be required to report information that would significantly harm
, the company's competitive position.
c. Management should not be required to provide forecasted financial information.
d. If needed by financial statement users, management should gather information not
included in the financial statements that would not otherwise be gathered for internal
use.
D
Which of the following relates to both relevance and faithful representation?
a. Cost constraint
b. Predictive value
c. Verifiability
d. Neutrality
A
. Expensing the cost of a wastebasket with an estimated useful life of 10 years when
purchased is an example of the application of the
a. consistency characteristic.
b. expense recognition principle.
c. materiality ingredient.
d. historical cost principle.
C
Which of the following statements about materiality is correct?
a. An item must make a difference or it need not be disclosed.
b. Materiality is a matter of relative size or importance.
c. An item is material if its inclusion or omission would influence or change the judgment
of a reasonable person.
d. All of these answers are correct.
D
Which of the following is considered a pervasive constraint by Statement of Financial
Accounting Concepts No. 8?
a. Comparability
b. Timeliness
c. Verifiability
d. Cost constraint
The cost constraint is also referred to as the
a. cost-benefit relationship.
Which accounting assumption or principle is being violated if a company is a party to
major litigation that it may lose and decides not to include the information in the financial
statements because it may have a negative impact on the company's stock price?
a. Full disclosure.
b. Going concern.
c. Historical cost.
d. Expense recognition.
A
Recognition of amortization of an intangible asset illustrates which principle of
accounting?
a. Expense recognition
b. Full disclosure
c. Revenue recognition
d. Historical cost
A
Which assumption or principle requires that all information significant enough to affect
decisions of reasonably informed users should be reported in the financial statements?
a. Matching.
b. Going concern.
c. Historical cost.
d. Full disclosure.
D
A company has a factory building that originally cost the company $250,000. The current
fair value of the factory building is $3 million. The president would like to report the
difference as a gain. The write-up would represent a violation of which accounting
assumption or principle?
a. Revenue recognition
b. Going concern
c. Historical cost
d. Monetary unit
C
Which of the following is a constraint in presenting financial information?
a. Cost
b. Full disclosure
c. Relevance
d. Consistency
A
,All of the following represent costs of providing financial information except
a. processing/preparing.
b. disseminating.
c. accessing capital.
d. auditing.
C
Which of the following is a benefit of providing financial information?
a. Potential litigation
b. Auditing
c. Disclosure to competition
d. Improved allocation of resources
D
Materiality is used in all of the following situations of providing financial information,
except
a. where an amount is of relative large size and importance.
b. where it would impact the judgment of a reasonable person.
c. where it would not make a difference in the actions of a decision maker.
d. where omission of the information would result in bias.
C
. What is prudence or conservatism?
a. Understating assets and net income
b. When in doubt, recognizing the option that is least likely to overstate assets and
income
c. Recognizing the option that is least likely to overstate assets and income
d. Recognizing revenue when earned and realized
B
Expensing the cost of copy paper when the paper is acquired is an example
a. materiality.
b. expense recognition.
c. conservatism.
d. industry practices.
A
Which of the following statements concerning the cost-benefit relationship is not true?
a. Business reporting should exclude information outside of management's expertise.
b. Management should not be required to report information that would significantly harm
, the company's competitive position.
c. Management should not be required to provide forecasted financial information.
d. If needed by financial statement users, management should gather information not
included in the financial statements that would not otherwise be gathered for internal
use.
D
Which of the following relates to both relevance and faithful representation?
a. Cost constraint
b. Predictive value
c. Verifiability
d. Neutrality
A
. Expensing the cost of a wastebasket with an estimated useful life of 10 years when
purchased is an example of the application of the
a. consistency characteristic.
b. expense recognition principle.
c. materiality ingredient.
d. historical cost principle.
C
Which of the following statements about materiality is correct?
a. An item must make a difference or it need not be disclosed.
b. Materiality is a matter of relative size or importance.
c. An item is material if its inclusion or omission would influence or change the judgment
of a reasonable person.
d. All of these answers are correct.
D
Which of the following is considered a pervasive constraint by Statement of Financial
Accounting Concepts No. 8?
a. Comparability
b. Timeliness
c. Verifiability
d. Cost constraint
The cost constraint is also referred to as the
a. cost-benefit relationship.
