CPA Exam Review
Managerial Accounting deals with _____ accounting, while Financial Accounting deals with
_____. ✔✔Internal; External
True or False:
Managerial accounting must follow GAAP. ✔✔False; Internal accounting so it does not have to
follow GAAP.
The assumption that a company or other entity will be able to continue operating for a time
that is sufficient to carry out its commitments and obligations. ✔✔Going Concern
The assumption that a company's business cycle can be broken into periods (i.e. one year, one
quarter, etc.) ✔✔Periodicity
Accounting is reported as units of currency (i.e. dollars and cents); not indexed for inflation
✔✔Monetary Unit
An accounting principle that allows the accountant to keep business separate from personal
(excludes legal) ✔✔Economic Entity
What is the general rule for capitalization of Research & Development costs? ✔✔You can't
capitalize R&D
True or False:
You accrue a contingency deemed to be reasonably possible ✔✔False: you accrue
contingencies deemed to be probable.
FASB ASC includes guidance for the _____. ✔✔SEC
Accounting information that enables comparing a company's reporting of one accounting
period to another. ✔✔Consistency
Principle that requires companies to match expenses with related revenues ✔✔Matching
What the company actually does vs. what the company says it does. ✔✔Substance over form
Managerial Accounting deals with _____ accounting, while Financial Accounting deals with
_____. ✔✔Internal; External
True or False:
Managerial accounting must follow GAAP. ✔✔False; Internal accounting so it does not have to
follow GAAP.
The assumption that a company or other entity will be able to continue operating for a time
that is sufficient to carry out its commitments and obligations. ✔✔Going Concern
The assumption that a company's business cycle can be broken into periods (i.e. one year, one
quarter, etc.) ✔✔Periodicity
Accounting is reported as units of currency (i.e. dollars and cents); not indexed for inflation
✔✔Monetary Unit
An accounting principle that allows the accountant to keep business separate from personal
(excludes legal) ✔✔Economic Entity
What is the general rule for capitalization of Research & Development costs? ✔✔You can't
capitalize R&D
True or False:
You accrue a contingency deemed to be reasonably possible ✔✔False: you accrue
contingencies deemed to be probable.
FASB ASC includes guidance for the _____. ✔✔SEC
Accounting information that enables comparing a company's reporting of one accounting
period to another. ✔✔Consistency
Principle that requires companies to match expenses with related revenues ✔✔Matching
What the company actually does vs. what the company says it does. ✔✔Substance over form
