ACC 3305 UPDATED PRACTICE EXAM
QUESTIONS WITH VERIFIED ANSWERS
Provides information on specialized financial information.
Not Aligned
Provides information for an identifiable accounting unit with distinct economic activities.
Aligned
Private sector board with a goal of creating a single set of high quality, globally accepted
standards.
ISAB
Committee that identifies, discusses, and resolves accounting issues within the framework
of the Codification with an emphasis on timely resolution.
EITF
U.S. governmental agency with authority granted by Congress, to prescribe and enforce
financial reporting standards.
SEC
Private sector board that is primarily responsible for establishing generally accepted
accounting principles.
FASB
Private sector organization of certified public accountants that establishes audit standards
for private companies and develops and grades the Uniform CPA Examination
AICPA
Cost of salaries paid in June for hours worked in June.
Expense
Cash dividends paid to shareholders.
Distribution to owners
Common stock issued for land.
Investment by owners
Interest income earned on investments owned by a manufacturer.
Gain
, Cost of goods sold of a manufacturer.
Expense
What qualitative characteristic, accounting principle, or assumption justifies the
accounting treatment
Prepayment for an annual license is allocated equally to expense over the next 12 months
for America Inc.
Expense recognition principle
What qualitative characteristic, accounting principle, or assumption justifies the
accounting treatment
Williams owns a shoe repair shop, a restaurant, and a service center. Separate financial
statements are prepared for each business.
Economic entity assumption
What qualitative characteristic, accounting principle, or assumption justifies the
accounting treatment
Inventories at Kaylee Inc. are valued at lower of cost or net realizable value. (There are two
answers to this question, one is the expense recognition principle, what is the other?)
Faithful representation
What qualitative characteristic, accounting principle, or assumption justifies the
accounting treatment
Although the inflation rate for the most recent fiscal year of Maxim Auto was 6%, no
adjustment was made on the year-end statements.
Monetary unit assumption
What qualitative characteristic, accounting principle, or assumption justifies the
accounting treatment
While making a delivery, the driver for A-to-Z Store collided with another vehicle, causing
both property damage and personal injury. The party sued A-to-Z for damages that could
exceed A-to-Z's insurance coverage. Existence of the suit was disclosed on A-to-Z's most
recent financial statements
Full disclosure principle
Identify the accounting assumption or principle that is violated
Although the economic deterioration is expected to follow straight-line, for efficiency
purposes, a company adopts an accelerated tax method of depreciation for financial
reporting purposes.
Expense recognition principle
QUESTIONS WITH VERIFIED ANSWERS
Provides information on specialized financial information.
Not Aligned
Provides information for an identifiable accounting unit with distinct economic activities.
Aligned
Private sector board with a goal of creating a single set of high quality, globally accepted
standards.
ISAB
Committee that identifies, discusses, and resolves accounting issues within the framework
of the Codification with an emphasis on timely resolution.
EITF
U.S. governmental agency with authority granted by Congress, to prescribe and enforce
financial reporting standards.
SEC
Private sector board that is primarily responsible for establishing generally accepted
accounting principles.
FASB
Private sector organization of certified public accountants that establishes audit standards
for private companies and develops and grades the Uniform CPA Examination
AICPA
Cost of salaries paid in June for hours worked in June.
Expense
Cash dividends paid to shareholders.
Distribution to owners
Common stock issued for land.
Investment by owners
Interest income earned on investments owned by a manufacturer.
Gain
, Cost of goods sold of a manufacturer.
Expense
What qualitative characteristic, accounting principle, or assumption justifies the
accounting treatment
Prepayment for an annual license is allocated equally to expense over the next 12 months
for America Inc.
Expense recognition principle
What qualitative characteristic, accounting principle, or assumption justifies the
accounting treatment
Williams owns a shoe repair shop, a restaurant, and a service center. Separate financial
statements are prepared for each business.
Economic entity assumption
What qualitative characteristic, accounting principle, or assumption justifies the
accounting treatment
Inventories at Kaylee Inc. are valued at lower of cost or net realizable value. (There are two
answers to this question, one is the expense recognition principle, what is the other?)
Faithful representation
What qualitative characteristic, accounting principle, or assumption justifies the
accounting treatment
Although the inflation rate for the most recent fiscal year of Maxim Auto was 6%, no
adjustment was made on the year-end statements.
Monetary unit assumption
What qualitative characteristic, accounting principle, or assumption justifies the
accounting treatment
While making a delivery, the driver for A-to-Z Store collided with another vehicle, causing
both property damage and personal injury. The party sued A-to-Z for damages that could
exceed A-to-Z's insurance coverage. Existence of the suit was disclosed on A-to-Z's most
recent financial statements
Full disclosure principle
Identify the accounting assumption or principle that is violated
Although the economic deterioration is expected to follow straight-line, for efficiency
purposes, a company adopts an accelerated tax method of depreciation for financial
reporting purposes.
Expense recognition principle
