ACTY 2100 Final Exam UPDATED ACTUAL QUESTIONS AND CORRECT
ANSWERS
Gross Profit Gross Profit=Revenue-Cost of Goods Sold
, Fraud Triangle
Inventory Costing Methods Specific Identification, First in First Out (FIFO), Last in First Out (LIFO), Weighted
Average Cost
Specific Identification Matches each unit of inventory with its actual cost
FIFO Assumes first units purchased are first ones sold
LIFO Assumes last units purchased are first ones sold
Weighted Average Cost Assumes units sold come from random mixture
Inventory turnover ratio Shows the number of times the firm sells its average inventory balance during a
reporting period
Inventory turnover ratio=cost of goods sold/Aging inventory
Principles of Accounting Conservatism
Consistency
Materiality
Full Disclosure
Conservatism general concept of recognizing expenses and liabilities as soon as possible when
there is uncertainty about the outcome, but to only recognize revenues and assets
when they are assured of being received.
Consistency once you adopt an accounting principle or method, continue to follow it
consistently in future accounting periods. Only change an accounting principle or
method if the new version in some way improves reported financial results.
Materiality an accounting standard can be ignored if the net impact of doing so has such a
small impact on the financial statements that a reader of the financial statements
would not be misled.
Full Disclosure requires a company to provide the necessary information so that people who are
accustomed to reading financial information can make informed decisions
concerning the company ..... the company's financial statements including any
supplementary schedules and notes
Financing Activities Transactions the company has with investors and creditors
Investing Activites Transactions involving the purchase and sale of resources that provide benefit for
several years
Operating Activities Transactions that relate to the primary operations of the company
ANSWERS
Gross Profit Gross Profit=Revenue-Cost of Goods Sold
, Fraud Triangle
Inventory Costing Methods Specific Identification, First in First Out (FIFO), Last in First Out (LIFO), Weighted
Average Cost
Specific Identification Matches each unit of inventory with its actual cost
FIFO Assumes first units purchased are first ones sold
LIFO Assumes last units purchased are first ones sold
Weighted Average Cost Assumes units sold come from random mixture
Inventory turnover ratio Shows the number of times the firm sells its average inventory balance during a
reporting period
Inventory turnover ratio=cost of goods sold/Aging inventory
Principles of Accounting Conservatism
Consistency
Materiality
Full Disclosure
Conservatism general concept of recognizing expenses and liabilities as soon as possible when
there is uncertainty about the outcome, but to only recognize revenues and assets
when they are assured of being received.
Consistency once you adopt an accounting principle or method, continue to follow it
consistently in future accounting periods. Only change an accounting principle or
method if the new version in some way improves reported financial results.
Materiality an accounting standard can be ignored if the net impact of doing so has such a
small impact on the financial statements that a reader of the financial statements
would not be misled.
Full Disclosure requires a company to provide the necessary information so that people who are
accustomed to reading financial information can make informed decisions
concerning the company ..... the company's financial statements including any
supplementary schedules and notes
Financing Activities Transactions the company has with investors and creditors
Investing Activites Transactions involving the purchase and sale of resources that provide benefit for
several years
Operating Activities Transactions that relate to the primary operations of the company
