INTERMEDIATE ACCOUNTING MIDTERM ONE UPDATED ACTUAL EXAM QUESTIONS
CORRECT ANSWERS GRADED A PLUS
⩥capital markets. Answer: as a composite of all investors and creditors,
helps our economy allocate resources
⩥cash basis accounting. Answer: measurement of cash receipts and cash
payments from transactions related to providing goods and services,
difference is net operating cash flow, only accounts for the cash
flow/inflow when it is happens
⩥accrual basis accounting. Answer: measurement of revenues and
expenses, regardless of when cash is received or paid, difference is net
income or net loss, ex unearned revenue
⩥GAAP (Generally Accepted Accounting Principles). Answer: a set of
both broad and specific guidelines that companies should follow when
measuring and reporting the information in their financial statements and
related notes
⩥conceptual framework. Answer: "accounting constitution"
,⩥accounting constitution. Answer: provides underlying foundation for
accounting standards, guide the selection of events to be accounted for,
measurement of those events, means of summarizing and
communicating them to interested parties
⩥faithful representation. Answer: is enhanced by completeness,
neutrality and being free from error
⩥comparability. Answer: helps users see similarities and difference
between events and conditions
⩥consistency. Answer: refers to the same accounting practices being
used over time to permit valid comparisons between reporting periods
⩥verifiability. Answer: implies that different knowledgable and
independent measurers would reach consensus regarding whether
information is faithful representation of what it is intended to depict
⩥timeliness. Answer: indicates that information is available to users
early enough to allow them to use it in their decision process
⩥understandability. Answer: means that users can comprehend the
information
, ⩥cost effectiveness. Answer: providing information must outweigh the
cost
⩥economic entity assumption. Answer: presumes that economic events
can be identified specifically with an economic entity
⩥going concern assumption. Answer: anticipates that a business entity
will continue to operate indefinitely
⩥periodicity assumption. Answer: allows the life of a company to be
divided into artificial time period to provide timely information
⩥recognition. Answer: refers to the process of admitting information
into the financial statements, when recognized it is recorded in the
accounts and reported on a statement
⩥measurement. Answer: the process of associating numerical amounts
with the elements
⩥paid in capital. Answer: amount invested by shareholder, credit
balance
⩥retained earnings. Answer: amounts earned by the corporation, credit
balance
CORRECT ANSWERS GRADED A PLUS
⩥capital markets. Answer: as a composite of all investors and creditors,
helps our economy allocate resources
⩥cash basis accounting. Answer: measurement of cash receipts and cash
payments from transactions related to providing goods and services,
difference is net operating cash flow, only accounts for the cash
flow/inflow when it is happens
⩥accrual basis accounting. Answer: measurement of revenues and
expenses, regardless of when cash is received or paid, difference is net
income or net loss, ex unearned revenue
⩥GAAP (Generally Accepted Accounting Principles). Answer: a set of
both broad and specific guidelines that companies should follow when
measuring and reporting the information in their financial statements and
related notes
⩥conceptual framework. Answer: "accounting constitution"
,⩥accounting constitution. Answer: provides underlying foundation for
accounting standards, guide the selection of events to be accounted for,
measurement of those events, means of summarizing and
communicating them to interested parties
⩥faithful representation. Answer: is enhanced by completeness,
neutrality and being free from error
⩥comparability. Answer: helps users see similarities and difference
between events and conditions
⩥consistency. Answer: refers to the same accounting practices being
used over time to permit valid comparisons between reporting periods
⩥verifiability. Answer: implies that different knowledgable and
independent measurers would reach consensus regarding whether
information is faithful representation of what it is intended to depict
⩥timeliness. Answer: indicates that information is available to users
early enough to allow them to use it in their decision process
⩥understandability. Answer: means that users can comprehend the
information
, ⩥cost effectiveness. Answer: providing information must outweigh the
cost
⩥economic entity assumption. Answer: presumes that economic events
can be identified specifically with an economic entity
⩥going concern assumption. Answer: anticipates that a business entity
will continue to operate indefinitely
⩥periodicity assumption. Answer: allows the life of a company to be
divided into artificial time period to provide timely information
⩥recognition. Answer: refers to the process of admitting information
into the financial statements, when recognized it is recorded in the
accounts and reported on a statement
⩥measurement. Answer: the process of associating numerical amounts
with the elements
⩥paid in capital. Answer: amount invested by shareholder, credit
balance
⩥retained earnings. Answer: amounts earned by the corporation, credit
balance
