Acct 301A Exam 1 CSUF – Questions With Correct
Solutions
Role of SEC, FASB, AICPA, and IASB Right Ans - They are the major
standard-setting bodies that establish generally accepted accounting
principles (GAAP).
FASB due process Right Ans - It is the process through which the FASB
develops and issues accounting standards, involving research, public
comment, and revisions before finalizing standards.
Fundamental qualities of accounting information Right Ans - Relevance
and faithful representation.
Basic assumptions in accounting Right Ans - Economic entity, going
concern, monetary unit, and periodicity.
Measurement principle in accounting Right Ans - It dictates that certain
assets and liabilities are measured using historical cost or fair value.
Comprehensive income vs. net income Right Ans - Comprehensive income
includes all changes in equity during a period except those resulting from
investments by owners and distributions to owners.
Methods of preparing an income statement Right Ans - Single-step and
multiple-step income statements.
Components of stockholders' equity Right Ans - Common stock, retained
earnings, additional paid-in capital, and accumulated other comprehensive
income.
Categories of cash flows in the statement of cash flows Right Ans -
Operating activities, investing activities, and financing activities.
Time value of money Right Ans - The concept that money today is worth
more than the same amount in the future due to its potential earning capacity.
Solutions
Role of SEC, FASB, AICPA, and IASB Right Ans - They are the major
standard-setting bodies that establish generally accepted accounting
principles (GAAP).
FASB due process Right Ans - It is the process through which the FASB
develops and issues accounting standards, involving research, public
comment, and revisions before finalizing standards.
Fundamental qualities of accounting information Right Ans - Relevance
and faithful representation.
Basic assumptions in accounting Right Ans - Economic entity, going
concern, monetary unit, and periodicity.
Measurement principle in accounting Right Ans - It dictates that certain
assets and liabilities are measured using historical cost or fair value.
Comprehensive income vs. net income Right Ans - Comprehensive income
includes all changes in equity during a period except those resulting from
investments by owners and distributions to owners.
Methods of preparing an income statement Right Ans - Single-step and
multiple-step income statements.
Components of stockholders' equity Right Ans - Common stock, retained
earnings, additional paid-in capital, and accumulated other comprehensive
income.
Categories of cash flows in the statement of cash flows Right Ans -
Operating activities, investing activities, and financing activities.
Time value of money Right Ans - The concept that money today is worth
more than the same amount in the future due to its potential earning capacity.
