BUS-A 311 - INTERMEDIATE ACCOUNTING I | EXAM QUESTIONS AND
CORRECT ANSWERS | VERIFIED INTERMEDIATE FINANCIAL LATEST
VERSION 2026/2027
BUS-A 311 INTERMEDIATE ACCOUNTING I
1. Which organization is recognized by the SEC as the designated private-
sector standard setter for U.S. GAAP?
A. International Accounting Standards Board (IASB)
B. American Institute of CPAs (AICPA)
C. Financial Accounting Standards Board (FASB)
D. Governmental Accounting Standards Board (GASB)
Correct Answer: C. Financial Accounting Standards Board (FASB)
Explanation: The SEC has designated the FASB to set GAAP for
nongovernmental entities. The GASB handles state and local
governments, and the IASB issues IFRS.
2. According to the FASB conceptual framework, the two fundamental
qualitative characteristics of useful financial information are
A. comparability and verifiability.
B. timeliness and understandability.
C. materiality and conservatism.
D. relevance and faithful representation.
Correct Answer: D. relevance and faithful representation.
Explanation: Relevance and faithful representation are the fundamental
characteristics. Comparability, verifiability, timeliness and
understandability only enhance usefulness.
BUS-A 311 Intermediate Accounting I | Page 1 of 64
,3. Which of the following is an enhancing qualitative characteristic of
accounting information?
A. Verifiability
B. Relevance
C. Faithful representation
D. Neutrality
Correct Answer: A. Verifiability
Explanation: Verifiability enhances usefulness along with comparability,
timeliness and understandability.
4. Information is considered relevant when it has
A. completeness, neutrality, and freedom from error.
B. predictive value, confirmatory value, or both.
C. timeliness and verifiability only.
D. understandability and comparability only.
Correct Answer: B. predictive value, confirmatory value, or both.
Explanation: Relevant information can make a difference in a decision
by helping users predict outcomes or confirm earlier expectations.
5. To be a faithful representation, information should be
A. complete, neutral, and free from material error.
B. timely, comparable, and understandable.
C. predictive, confirmatory, and material.
D. verifiable, timely, and conservative.
Correct Answer: A. complete, neutral, and free from material error.
Explanation: Completeness, neutrality and freedom from error are the
three components of faithful representation.
6. The assumption that the activities of a business are kept separate from
those of its owners is the
A. going concern assumption.
B. periodicity assumption.
C. monetary unit assumption.
D. economic entity assumption.
Correct Answer: D. economic entity assumption.
Explanation: Under the economic entity assumption, the business is
treated as a unit separate from its owners and from other businesses.
BUS-A 311 Intermediate Accounting I | Page 2 of 64
,7. Reporting long-lived assets at historical cost rather than liquidation value
is supported mainly by the
A. economic entity assumption.
B. periodicity assumption.
C. going concern assumption.
D. monetary unit assumption.
Correct Answer: C. going concern assumption.
Explanation: Because the entity is expected to continue operating, assets
are reported on the basis of cost rather than what they would bring in a
forced sale.
8. Preparing quarterly and annual financial statements for a business that
will operate for many years rests on the
A. going concern assumption.
B. periodicity assumption.
C. economic entity assumption.
D. monetary unit assumption.
Correct Answer: B. periodicity assumption.
Explanation: The periodicity assumption divides the life of an enterprise
into artificial time periods so that information can be reported on a
timely basis.
9. Which assumption means that money is the common unit of measure and
that its purchasing power is assumed to be stable?
A. Periodicity assumption
B. Going concern assumption
C. Monetary unit assumption
D. Economic entity assumption
Correct Answer: C. Monetary unit assumption
Explanation: The monetary unit assumption measures transactions in a
common currency and generally ignores changes in the price level.
BUS-A 311 Intermediate Accounting I | Page 3 of 64
, 10. Under the five-step revenue model (ASC 606), revenue is recognized
A. when a performance obligation is satisfied by transferring control of
a good or service to the customer.
B. when cash is collected from the customer.
C. when the customer places the order.
D. when the sales contract is signed.
Correct Answer: A. when a performance obligation is satisfied by
transferring control of a good or service to the customer.
Explanation: Revenue is recorded as, or when, the entity satisfies a
performance obligation, which occurs when control passes to the
customer.
11. Recording sales commissions as an expense in the same period as the
related sales revenue is an example of
A. systematic and rational allocation.
B. immediate recognition.
C. the cost constraint.
D. associating cause and effect.
Correct Answer: D. associating cause and effect.
Explanation: Commissions have a direct relationship with revenue, so
they are matched to the period in which the revenue is earned.
12. The full disclosure principle requires that a company
A. disclose every transaction regardless of amount.
B. provide information that is of sufficient importance to influence the
judgment of an informed user.
C. disclose only the information required by income tax law.
D. disclose only information that is favorable to the company.
Correct Answer: B. provide information that is of sufficient
importance to influence the judgment of an informed user.
Explanation: Full disclosure calls for information important enough to
make a difference to users, usually through the statements and notes.
BUS-A 311 Intermediate Accounting I | Page 4 of 64
CORRECT ANSWERS | VERIFIED INTERMEDIATE FINANCIAL LATEST
VERSION 2026/2027
BUS-A 311 INTERMEDIATE ACCOUNTING I
1. Which organization is recognized by the SEC as the designated private-
sector standard setter for U.S. GAAP?
A. International Accounting Standards Board (IASB)
B. American Institute of CPAs (AICPA)
C. Financial Accounting Standards Board (FASB)
D. Governmental Accounting Standards Board (GASB)
Correct Answer: C. Financial Accounting Standards Board (FASB)
Explanation: The SEC has designated the FASB to set GAAP for
nongovernmental entities. The GASB handles state and local
governments, and the IASB issues IFRS.
2. According to the FASB conceptual framework, the two fundamental
qualitative characteristics of useful financial information are
A. comparability and verifiability.
B. timeliness and understandability.
C. materiality and conservatism.
D. relevance and faithful representation.
Correct Answer: D. relevance and faithful representation.
Explanation: Relevance and faithful representation are the fundamental
characteristics. Comparability, verifiability, timeliness and
understandability only enhance usefulness.
BUS-A 311 Intermediate Accounting I | Page 1 of 64
,3. Which of the following is an enhancing qualitative characteristic of
accounting information?
A. Verifiability
B. Relevance
C. Faithful representation
D. Neutrality
Correct Answer: A. Verifiability
Explanation: Verifiability enhances usefulness along with comparability,
timeliness and understandability.
4. Information is considered relevant when it has
A. completeness, neutrality, and freedom from error.
B. predictive value, confirmatory value, or both.
C. timeliness and verifiability only.
D. understandability and comparability only.
Correct Answer: B. predictive value, confirmatory value, or both.
Explanation: Relevant information can make a difference in a decision
by helping users predict outcomes or confirm earlier expectations.
5. To be a faithful representation, information should be
A. complete, neutral, and free from material error.
B. timely, comparable, and understandable.
C. predictive, confirmatory, and material.
D. verifiable, timely, and conservative.
Correct Answer: A. complete, neutral, and free from material error.
Explanation: Completeness, neutrality and freedom from error are the
three components of faithful representation.
6. The assumption that the activities of a business are kept separate from
those of its owners is the
A. going concern assumption.
B. periodicity assumption.
C. monetary unit assumption.
D. economic entity assumption.
Correct Answer: D. economic entity assumption.
Explanation: Under the economic entity assumption, the business is
treated as a unit separate from its owners and from other businesses.
BUS-A 311 Intermediate Accounting I | Page 2 of 64
,7. Reporting long-lived assets at historical cost rather than liquidation value
is supported mainly by the
A. economic entity assumption.
B. periodicity assumption.
C. going concern assumption.
D. monetary unit assumption.
Correct Answer: C. going concern assumption.
Explanation: Because the entity is expected to continue operating, assets
are reported on the basis of cost rather than what they would bring in a
forced sale.
8. Preparing quarterly and annual financial statements for a business that
will operate for many years rests on the
A. going concern assumption.
B. periodicity assumption.
C. economic entity assumption.
D. monetary unit assumption.
Correct Answer: B. periodicity assumption.
Explanation: The periodicity assumption divides the life of an enterprise
into artificial time periods so that information can be reported on a
timely basis.
9. Which assumption means that money is the common unit of measure and
that its purchasing power is assumed to be stable?
A. Periodicity assumption
B. Going concern assumption
C. Monetary unit assumption
D. Economic entity assumption
Correct Answer: C. Monetary unit assumption
Explanation: The monetary unit assumption measures transactions in a
common currency and generally ignores changes in the price level.
BUS-A 311 Intermediate Accounting I | Page 3 of 64
, 10. Under the five-step revenue model (ASC 606), revenue is recognized
A. when a performance obligation is satisfied by transferring control of
a good or service to the customer.
B. when cash is collected from the customer.
C. when the customer places the order.
D. when the sales contract is signed.
Correct Answer: A. when a performance obligation is satisfied by
transferring control of a good or service to the customer.
Explanation: Revenue is recorded as, or when, the entity satisfies a
performance obligation, which occurs when control passes to the
customer.
11. Recording sales commissions as an expense in the same period as the
related sales revenue is an example of
A. systematic and rational allocation.
B. immediate recognition.
C. the cost constraint.
D. associating cause and effect.
Correct Answer: D. associating cause and effect.
Explanation: Commissions have a direct relationship with revenue, so
they are matched to the period in which the revenue is earned.
12. The full disclosure principle requires that a company
A. disclose every transaction regardless of amount.
B. provide information that is of sufficient importance to influence the
judgment of an informed user.
C. disclose only the information required by income tax law.
D. disclose only information that is favorable to the company.
Correct Answer: B. provide information that is of sufficient
importance to influence the judgment of an informed user.
Explanation: Full disclosure calls for information important enough to
make a difference to users, usually through the statements and notes.
BUS-A 311 Intermediate Accounting I | Page 4 of 64
