1|Page
ACCT 2001 CHAPTER 2 ACTUAL EXAM
PREP 2026 ALL QUESTIONS AND CORRECT
DETAILED ANSWERS ALREADY A GRADED
WITH EXPERT FEEDBACK |NEW AND
REVISED
Which principle would a company be violating if it withheld information
that would make a difference to users of financial statements?
a. fair value principle
b. materiality principle
c. cost constraint principle
d. full disclosure principle - ANSWER- d. full disclosure principle
According to the historical cost principle, if an asset costs $50,000 when
it was purchased, it would be recorded at its ________ over the time the
asset is held.
a. air value
b. appreciated value
c. market value
d. cost - ANSWER- d. cost
Which of the following statements is true?
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a. Accounting information should be neutral to enhance faithful
representation.
b. Neutral accounting information helps to compare methods of different
companies.
c. If the accounting information is neutral, it enhances timeliness.
d. If the accounting information is neutral, it increases its materiality. -
ANSWER-
One difference between accounting in the United States and the
European Union is that the U.S. follows ________, whereas the
European Union follows
A:
IFRS; FASB.
B:
FASB; GAAP.
C:
IFRS; GAAP.
D:
GAAP; IFRS. - ANSWER-
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Based on the key assumptions of financial reporting, which of the
following should be excluded from financial reports?
a. items that can be expressed in monetary units
b. customer satisfaction and complaint reports
c. transactions that occurred within the past year
d. purchase of a vehicle for a manager's work use - ANSWER- b.
customer satisfaction and complaint reports
In 2017, Spencer Realty considered conducting a survey of every home
to determine which homes may be put on the market within the next
year. This information would be included in their financial statements as
a predictor of potential future revenue. The cost of the survey would be
$2.6 million, and the results would not differentiate potential business
for Spencer Realty compared to other realtor companies. In the end,
Spencer Realty decided to not conduct the survey based on which
principle?
a. cost constraint
b. historical cost
c. full disclosure
d. fair value - ANSWER- a. cost constraint
________ ratios measure the ability of a company to survive over a long
period of time.
ACCT 2001 CHAPTER 2 ACTUAL EXAM
PREP 2026 ALL QUESTIONS AND CORRECT
DETAILED ANSWERS ALREADY A GRADED
WITH EXPERT FEEDBACK |NEW AND
REVISED
Which principle would a company be violating if it withheld information
that would make a difference to users of financial statements?
a. fair value principle
b. materiality principle
c. cost constraint principle
d. full disclosure principle - ANSWER- d. full disclosure principle
According to the historical cost principle, if an asset costs $50,000 when
it was purchased, it would be recorded at its ________ over the time the
asset is held.
a. air value
b. appreciated value
c. market value
d. cost - ANSWER- d. cost
Which of the following statements is true?
,2|Page
a. Accounting information should be neutral to enhance faithful
representation.
b. Neutral accounting information helps to compare methods of different
companies.
c. If the accounting information is neutral, it enhances timeliness.
d. If the accounting information is neutral, it increases its materiality. -
ANSWER-
One difference between accounting in the United States and the
European Union is that the U.S. follows ________, whereas the
European Union follows
A:
IFRS; FASB.
B:
FASB; GAAP.
C:
IFRS; GAAP.
D:
GAAP; IFRS. - ANSWER-
, 3|Page
Based on the key assumptions of financial reporting, which of the
following should be excluded from financial reports?
a. items that can be expressed in monetary units
b. customer satisfaction and complaint reports
c. transactions that occurred within the past year
d. purchase of a vehicle for a manager's work use - ANSWER- b.
customer satisfaction and complaint reports
In 2017, Spencer Realty considered conducting a survey of every home
to determine which homes may be put on the market within the next
year. This information would be included in their financial statements as
a predictor of potential future revenue. The cost of the survey would be
$2.6 million, and the results would not differentiate potential business
for Spencer Realty compared to other realtor companies. In the end,
Spencer Realty decided to not conduct the survey based on which
principle?
a. cost constraint
b. historical cost
c. full disclosure
d. fair value - ANSWER- a. cost constraint
________ ratios measure the ability of a company to survive over a long
period of time.
