ACCY PRACTICE TEST QUESTIONS
WITH 100% CORRECT ANSWERS
What are the components of the fraud triangle? - Answer- Opportunity, pressure,
rationalization.
What reduces the likelihood of fraud? - Answer- Separation of duties.
What is not typically present when fraud occurs? - Answer- The assistance of others.
Why is independence important for auditors? - Answer- It enhances credibility and
objectivity.
What is included in the auditor's standard report? - Answer- Opinion on whether
financial statements are presented fairly.
What does an unqualified clean audited opinion indicate? - Answer- The financial
statements are presented fairly in all material aspects.
What is the usefulness of an audit to financial statement users? - Answer- It provides
assurance that the financial statements are accurate and reliable.
What is the purpose of management guarantees? - Answer- To ensure that
management has not misappropriated assets and that financial statements are accurate
and correct.
What is materiality in financial statements? - Answer- Materiality refers to the
significance of an error or omission in financial statements that could influence the
decision-making of users.
What is FOB destination? - Answer- FOB destination means that the seller retains
ownership of the goods until they are delivered to the buyer.
What is a bank reconciliation? - Answer- A bank reconciliation is a document that
explains the differences between the cash balance recorded on the bank statement and
the cash balance recorded in the depositor's accounting records.
, What is included in cash for financial reporting? - Answer- Cash generally includes
currency and items payable on demand, but accounts receivable would not be
considered cash.
What is a short term investment? - Answer- An investment expected to be sold within
one year.
What is true about the allowance method? - Answer- It estimates uncollectible accounts
before they occur.
What is the purpose of allowance for doubtful accounts? - Answer- To match bad debt
expense to the same period as the related sales.
What is an alternate name for the percent of revenue method? - Answer- Income
statement approach.
What are short term creditors usually most interested in assessing? - Answer- Liquidity.
What are assets that are used relatively quickly? - Answer- Current assets.
Which term applies to long term assets that have no physical substance? - Answer-
Intangible assets.
How long is the legal life of music copyrights? - Answer- Their lifetime plus 70 years.
What gives you an exclusive legal right to produce and sell a product with unique
features? - Answer- Patent.
What term is used to recognize expenses for intangible assets with identifiable useful
lives? - Answer- Amortization.
Which intangible asset is attributed to favorable factors like reputation? - Answer-
Goodwill.
On a classified balance sheet, what can financial statement users distinguish between?
- Answer- Current and non-current assets.
Which items typically appear in the current liabilities section of the balance sheet? -
Answer- All the above: Interest payable, Salaries payable, Accounts payable.
What may interest charges on notes payable be based on? - Answer- Fixed and
variable interest rates.
What is included in a loan agreement to provide creditors with additional protection? -
Answer- Restrictive covenant.
WITH 100% CORRECT ANSWERS
What are the components of the fraud triangle? - Answer- Opportunity, pressure,
rationalization.
What reduces the likelihood of fraud? - Answer- Separation of duties.
What is not typically present when fraud occurs? - Answer- The assistance of others.
Why is independence important for auditors? - Answer- It enhances credibility and
objectivity.
What is included in the auditor's standard report? - Answer- Opinion on whether
financial statements are presented fairly.
What does an unqualified clean audited opinion indicate? - Answer- The financial
statements are presented fairly in all material aspects.
What is the usefulness of an audit to financial statement users? - Answer- It provides
assurance that the financial statements are accurate and reliable.
What is the purpose of management guarantees? - Answer- To ensure that
management has not misappropriated assets and that financial statements are accurate
and correct.
What is materiality in financial statements? - Answer- Materiality refers to the
significance of an error or omission in financial statements that could influence the
decision-making of users.
What is FOB destination? - Answer- FOB destination means that the seller retains
ownership of the goods until they are delivered to the buyer.
What is a bank reconciliation? - Answer- A bank reconciliation is a document that
explains the differences between the cash balance recorded on the bank statement and
the cash balance recorded in the depositor's accounting records.
, What is included in cash for financial reporting? - Answer- Cash generally includes
currency and items payable on demand, but accounts receivable would not be
considered cash.
What is a short term investment? - Answer- An investment expected to be sold within
one year.
What is true about the allowance method? - Answer- It estimates uncollectible accounts
before they occur.
What is the purpose of allowance for doubtful accounts? - Answer- To match bad debt
expense to the same period as the related sales.
What is an alternate name for the percent of revenue method? - Answer- Income
statement approach.
What are short term creditors usually most interested in assessing? - Answer- Liquidity.
What are assets that are used relatively quickly? - Answer- Current assets.
Which term applies to long term assets that have no physical substance? - Answer-
Intangible assets.
How long is the legal life of music copyrights? - Answer- Their lifetime plus 70 years.
What gives you an exclusive legal right to produce and sell a product with unique
features? - Answer- Patent.
What term is used to recognize expenses for intangible assets with identifiable useful
lives? - Answer- Amortization.
Which intangible asset is attributed to favorable factors like reputation? - Answer-
Goodwill.
On a classified balance sheet, what can financial statement users distinguish between?
- Answer- Current and non-current assets.
Which items typically appear in the current liabilities section of the balance sheet? -
Answer- All the above: Interest payable, Salaries payable, Accounts payable.
What may interest charges on notes payable be based on? - Answer- Fixed and
variable interest rates.
What is included in a loan agreement to provide creditors with additional protection? -
Answer- Restrictive covenant.
