ACCT 5312| ACCY 200 CQ2 | questions and Answers
Which of the following entities would not require accounting information pertaining to their
economic activities? ** Answ** All:
Social clubs.
Not-for-profit entities.
State governments.
The authoritative financial accounting standards-setting body in the United States is presently
the: ** Answ** Financial Accounting Standards Board (FASB).
Which of the following is not an example of a decision or informed judgment that a potential
employee could make from accounting information? ** Answ** Personnel turnover statistics
(i.e., hiring and terminations).
The ethical concept of independence means that an accountant employed: ** Answ** by an
auditing firm cannot own any stock in the company being audited.
The ethical concept of integrity means that an individual must: ** Answ** attempt to be
honest and forthright in dealings and communications with others.
Major classifications of accounting activity would not include: ** Answ** auditing, income
tax accounting, governmental accounting.
Which classification of accounting is most concerned with the use of economic and financial
information to plan and control many of the activities of the entity? ** Answ** Managerial
accounting.
,An unqualified auditors' opinion about an entity's financial statements: ** Answ** states that
they are presented in conformance with U.S. generally accepted accounting principles.
Which of the following is an objective of financial reporting by business enterprises? **
Answ** Financial reporting should provide information about the economic resources of an
enterprise, the claims to those resources, and changes in those resources and claims to them.
Which of the following is true about the International Accounting Standards Board (IASB)? **
Answ** Only the IASB has been working with the FASB in recent years to achieve
convergence of International Financial Reporting Standards (IFRS) and U.S. GAAP and the goal
of the IASB is to develop a single set of high quality, understandable, enforceable, and globally
accepted financial reporting standards based upon clearly articulated principles are correct.
Which of the following is not a transaction to be recorded in the accounting records of an entity?
** Answ** Receipt of a plaque recognizing the firm's encouragement of employee
participation in the United Way fund drive.
Transactions are summarized in: ** Answ** The entity's accounts.
Which of the following is not a principal form of business organization? ** Answ** Limited
unregistered business.
The balance sheet equation can be represented by: ** Answ** Assets = Liabilities +
Stockholders' Equity.
Assets - Liabilities = Stockholders' Equity.
Net Assets = Stockholders' Equity.
The distinction between a current asset and other assets: ** Answ** is based on when the
asset is expected to be converted to cash, or used to benefit the entity.
The income statement shows amounts for: ** Answ** revenues, gains, expenses and losses.
,Retained Earnings represents: ** Answ** cumulative net income that has not been
distributed to stockholders as dividends.
The Statement of Cash Flows: ** Answ** shows how cash changed during the period.
The going concern concept refers to a presumption that: ** Answ** the entity will continue
to operate in the foreseeable future.
Which of the following accounting methods accomplishes much of the matching of revenues and
expenses? ** Answ** Accrual accounting.
An expanded version of the accounting equation could be: ** Answ** Assets = Liabilities +
Paid-in Capital + Beginning Retained Earnings + Revenues - Expenses - Dividends
In the seller's records, the sale of merchandise on account would: ** Answ** increase assets
and increase expenses.
In the buyer's records, the purchase of merchandise on account would: ** Answ** increase
assets and increase liabilities.
A newspaper ad submitted and published this week, with the agreement to get paid for it next
week would, in the newspaper's records: ** Answ** increase assets and increase revenues.
A debit entry will: ** Answ** increase an expense account.
A credit entry will: ** Answ** increase a liability account.
A credit entry will: ** Answ** increase the balance of a revenue account.
, Which of the following is not one of the 5 questions of transaction analysis? ** Answ** Is
this an accrual?
A journal entry recording an accrual: ** Answ** results in a better matching of revenues and
expenses.
The current assets of most companies are usually made up of: ** Answ** cash and assets
expected to be converted to cash within a year.
The principal reason for reconciling the cash balance per books with the balance shown on the
bank statement is to: ** Answ** determine the amount of cash in the account actually
available to the entity.
A cash equivalent is a current asset that: ** Answ** is readily convertible into cash with a
minimal risk.
The accounting concept or principle applied when an allowance is provided for estimated
uncollectible accounts receivable is: ** Answ** matching revenue and expense.
The allowance for uncollectible accounts is a(n): ** Answ** contra current asset.
When a firm uses the LIFO inventory cost flow assumption: ** Answ** better matching of
revenue and expense is achieved than under FIFO.
When an uncollectible account receivable is written off against the allowance for bad debts: **
Answ** total current assets are not affected.
When costs are rising over time: ** Answ** FIFO results in higher profits than LIFO.
In an inflationary economic environment, the selling price set for a firm's products will: **
Answ** not be affected by the cost flow assumption used.
Which of the following entities would not require accounting information pertaining to their
economic activities? ** Answ** All:
Social clubs.
Not-for-profit entities.
State governments.
The authoritative financial accounting standards-setting body in the United States is presently
the: ** Answ** Financial Accounting Standards Board (FASB).
Which of the following is not an example of a decision or informed judgment that a potential
employee could make from accounting information? ** Answ** Personnel turnover statistics
(i.e., hiring and terminations).
The ethical concept of independence means that an accountant employed: ** Answ** by an
auditing firm cannot own any stock in the company being audited.
The ethical concept of integrity means that an individual must: ** Answ** attempt to be
honest and forthright in dealings and communications with others.
Major classifications of accounting activity would not include: ** Answ** auditing, income
tax accounting, governmental accounting.
Which classification of accounting is most concerned with the use of economic and financial
information to plan and control many of the activities of the entity? ** Answ** Managerial
accounting.
,An unqualified auditors' opinion about an entity's financial statements: ** Answ** states that
they are presented in conformance with U.S. generally accepted accounting principles.
Which of the following is an objective of financial reporting by business enterprises? **
Answ** Financial reporting should provide information about the economic resources of an
enterprise, the claims to those resources, and changes in those resources and claims to them.
Which of the following is true about the International Accounting Standards Board (IASB)? **
Answ** Only the IASB has been working with the FASB in recent years to achieve
convergence of International Financial Reporting Standards (IFRS) and U.S. GAAP and the goal
of the IASB is to develop a single set of high quality, understandable, enforceable, and globally
accepted financial reporting standards based upon clearly articulated principles are correct.
Which of the following is not a transaction to be recorded in the accounting records of an entity?
** Answ** Receipt of a plaque recognizing the firm's encouragement of employee
participation in the United Way fund drive.
Transactions are summarized in: ** Answ** The entity's accounts.
Which of the following is not a principal form of business organization? ** Answ** Limited
unregistered business.
The balance sheet equation can be represented by: ** Answ** Assets = Liabilities +
Stockholders' Equity.
Assets - Liabilities = Stockholders' Equity.
Net Assets = Stockholders' Equity.
The distinction between a current asset and other assets: ** Answ** is based on when the
asset is expected to be converted to cash, or used to benefit the entity.
The income statement shows amounts for: ** Answ** revenues, gains, expenses and losses.
,Retained Earnings represents: ** Answ** cumulative net income that has not been
distributed to stockholders as dividends.
The Statement of Cash Flows: ** Answ** shows how cash changed during the period.
The going concern concept refers to a presumption that: ** Answ** the entity will continue
to operate in the foreseeable future.
Which of the following accounting methods accomplishes much of the matching of revenues and
expenses? ** Answ** Accrual accounting.
An expanded version of the accounting equation could be: ** Answ** Assets = Liabilities +
Paid-in Capital + Beginning Retained Earnings + Revenues - Expenses - Dividends
In the seller's records, the sale of merchandise on account would: ** Answ** increase assets
and increase expenses.
In the buyer's records, the purchase of merchandise on account would: ** Answ** increase
assets and increase liabilities.
A newspaper ad submitted and published this week, with the agreement to get paid for it next
week would, in the newspaper's records: ** Answ** increase assets and increase revenues.
A debit entry will: ** Answ** increase an expense account.
A credit entry will: ** Answ** increase a liability account.
A credit entry will: ** Answ** increase the balance of a revenue account.
, Which of the following is not one of the 5 questions of transaction analysis? ** Answ** Is
this an accrual?
A journal entry recording an accrual: ** Answ** results in a better matching of revenues and
expenses.
The current assets of most companies are usually made up of: ** Answ** cash and assets
expected to be converted to cash within a year.
The principal reason for reconciling the cash balance per books with the balance shown on the
bank statement is to: ** Answ** determine the amount of cash in the account actually
available to the entity.
A cash equivalent is a current asset that: ** Answ** is readily convertible into cash with a
minimal risk.
The accounting concept or principle applied when an allowance is provided for estimated
uncollectible accounts receivable is: ** Answ** matching revenue and expense.
The allowance for uncollectible accounts is a(n): ** Answ** contra current asset.
When a firm uses the LIFO inventory cost flow assumption: ** Answ** better matching of
revenue and expense is achieved than under FIFO.
When an uncollectible account receivable is written off against the allowance for bad debts: **
Answ** total current assets are not affected.
When costs are rising over time: ** Answ** FIFO results in higher profits than LIFO.
In an inflationary economic environment, the selling price set for a firm's products will: **
Answ** not be affected by the cost flow assumption used.
