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WALL STREET PREP ACCOUNTING CRASH COURSE EXAM
V4 EXAM WITH COMPLETE QUESTIONS AND CORRECT
DETAILED SOLUTIONS ALL WITH RATIONALES LATEST
THIS YEAR
WALL STREET PREP ACCOUNTING CRASH COURSE EXAM V4 – SUMMARIZED COVERAGE
The Wall Street Prep Accounting Crash Course Exam V4 is a 40-question, 2-hour exam requiring
a 70% score to pass (C grade). It tests US GAAP fundamentals, including the accounting
equation, financial statements (income statement, balance sheet, cash flow statement), accrual
accounting, revenue recognition, expense matching, stock-based compensation, SEC reporting
forms (10-K, 10-Q, 8-K), PP&E and depreciation, and ratio analysis.
200 RANDOMIZED MCQS WITH ANSWERS AND ITALICIZED RATIONALES
1. According to the course material, accounting is best described as:
A) A method for calculating taxes
B) The language of business that standardizes financial performance measurement
C) A tool exclusively used by accountants
D) A system for tracking cash flows only
Answer: B
The course explicitly states that "accounting is the language of business" and that it is "a
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standard set of rules for measuring a firm's financial performance." It is not solely for tax
purposes nor used only by accountants.
2. The Securities and Exchange Commission (SEC) was established by the U.S. Congress in:
A) 1929
B) 1930
C) 1934
D) 1944
Answer: C
Following the stock market crash of 1929, the SEC was created in 1934 to regulate the securities
markets and protect investors.
3. Which organization is directly responsible for establishing U.S. accounting standards?
A) Securities and Exchange Commission (SEC)
B) Financial Accounting Standards Board (FASB)
C) International Accounting Standards Board (IASB)
D) Statements of Financial Accounting Standards (SFAS)
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Answer: B
The SEC authorizes the FASB to determine U.S. accounting rules; the FASB has been the
private-sector body responsible for codifying GAAP since 1973.
4. Under the Historical Cost Principle, if a company purchased land
for 1𝑚𝑖𝑙𝑙𝑖𝑜𝑛𝑡ℎ𝑎𝑡𝑖𝑠𝑛𝑜𝑤𝑤𝑜𝑟𝑡ℎ3 million, the land should be recorded on the financial
statements at:
A) 0𝐵)1 million (original purchase price)
C) 2𝑚𝑖𝑙𝑙𝑖𝑜𝑛(𝑎𝑣𝑒𝑟𝑎𝑔𝑒𝑣𝑎𝑙𝑢𝑒)𝐷)3 million (current market value)
Answer: B
US GAAP requires that companies record resources at their original historical cost, not
subsequent fair value, to avoid management discretion and subjectivity.
5. The Amazon.com example in the course demonstrates that under accrual accounting, both
revenue and expenses should be recorded when:
A) The customer places an order
B) The cash is received from the customer
C) The book is shipped to the customer
D) The return period expires
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Answer: C
In the Amazon case, revenue is recognized when the product ships, because that is when the
transaction is complete and measurable, not when cash changes hands.
6. Which of the following is NOT one of the four basic accounting assumptions?
A) Accounting Entity
B) Going Concern
C) Historical Cost
D) Periodicity
Answer: C
The four underlying assumptions are Accounting Entity, Going Concern, Measurement, and
Periodicity. Historical Cost is a principle, not an assumption.
7. The Matching Principle requires that:
A) Revenues be recorded when cash is received
B) Costs associated with making a product must be recorded in the same period as the revenue
from that product
C) All expenses be recorded immediately when they are paid
D) Assets be recorded at their liquidation value
WALL STREET PREP ACCOUNTING CRASH COURSE EXAM
V4 EXAM WITH COMPLETE QUESTIONS AND CORRECT
DETAILED SOLUTIONS ALL WITH RATIONALES LATEST
THIS YEAR
WALL STREET PREP ACCOUNTING CRASH COURSE EXAM V4 – SUMMARIZED COVERAGE
The Wall Street Prep Accounting Crash Course Exam V4 is a 40-question, 2-hour exam requiring
a 70% score to pass (C grade). It tests US GAAP fundamentals, including the accounting
equation, financial statements (income statement, balance sheet, cash flow statement), accrual
accounting, revenue recognition, expense matching, stock-based compensation, SEC reporting
forms (10-K, 10-Q, 8-K), PP&E and depreciation, and ratio analysis.
200 RANDOMIZED MCQS WITH ANSWERS AND ITALICIZED RATIONALES
1. According to the course material, accounting is best described as:
A) A method for calculating taxes
B) The language of business that standardizes financial performance measurement
C) A tool exclusively used by accountants
D) A system for tracking cash flows only
Answer: B
The course explicitly states that "accounting is the language of business" and that it is "a
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standard set of rules for measuring a firm's financial performance." It is not solely for tax
purposes nor used only by accountants.
2. The Securities and Exchange Commission (SEC) was established by the U.S. Congress in:
A) 1929
B) 1930
C) 1934
D) 1944
Answer: C
Following the stock market crash of 1929, the SEC was created in 1934 to regulate the securities
markets and protect investors.
3. Which organization is directly responsible for establishing U.S. accounting standards?
A) Securities and Exchange Commission (SEC)
B) Financial Accounting Standards Board (FASB)
C) International Accounting Standards Board (IASB)
D) Statements of Financial Accounting Standards (SFAS)
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Answer: B
The SEC authorizes the FASB to determine U.S. accounting rules; the FASB has been the
private-sector body responsible for codifying GAAP since 1973.
4. Under the Historical Cost Principle, if a company purchased land
for 1𝑚𝑖𝑙𝑙𝑖𝑜𝑛𝑡ℎ𝑎𝑡𝑖𝑠𝑛𝑜𝑤𝑤𝑜𝑟𝑡ℎ3 million, the land should be recorded on the financial
statements at:
A) 0𝐵)1 million (original purchase price)
C) 2𝑚𝑖𝑙𝑙𝑖𝑜𝑛(𝑎𝑣𝑒𝑟𝑎𝑔𝑒𝑣𝑎𝑙𝑢𝑒)𝐷)3 million (current market value)
Answer: B
US GAAP requires that companies record resources at their original historical cost, not
subsequent fair value, to avoid management discretion and subjectivity.
5. The Amazon.com example in the course demonstrates that under accrual accounting, both
revenue and expenses should be recorded when:
A) The customer places an order
B) The cash is received from the customer
C) The book is shipped to the customer
D) The return period expires
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Answer: C
In the Amazon case, revenue is recognized when the product ships, because that is when the
transaction is complete and measurable, not when cash changes hands.
6. Which of the following is NOT one of the four basic accounting assumptions?
A) Accounting Entity
B) Going Concern
C) Historical Cost
D) Periodicity
Answer: C
The four underlying assumptions are Accounting Entity, Going Concern, Measurement, and
Periodicity. Historical Cost is a principle, not an assumption.
7. The Matching Principle requires that:
A) Revenues be recorded when cash is received
B) Costs associated with making a product must be recorded in the same period as the revenue
from that product
C) All expenses be recorded immediately when they are paid
D) Assets be recorded at their liquidation value
