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INTRO TO FINANCIAL ACCOUNTING EXAM 1
QUESTIONS WITH ANSWERS
Accounting consists of three basic activities-correct-answer-Identifies, records,
communicates
Who uses Accounting Data-correct-answer-External Users: Creditors and Investors
Recent Financial Scandals-correct-answer-Enron, WorldCom, HealthSouth, AIG
Sarbanes-Oxley Act of (SOX).-correct-answer-Added new criminal charges for
accounting scandals
Financial Statements-correct-answer-Balance Sheet
Income Statement
Statement of Stock Holder's Equity
Statement of Cash Flows
Note Disclosure
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Generally Accepted Accounting Principles (GAAP)-correct-answer-Standards
generally accepted and universally practiced
Standard Setting Bodies-correct-answer-Financial Accounting Standards Board
(FASB)
(SEC)
International Accounting Standards Board
(IASB)
Historical Cost Principle-correct-answer-dictates that companies record assets at
their cost.
Fair Value Principle-correct-answer-states that assets and liabilities should be
reported at a fair value
Monetary Unit Assumption-correct-answer-companies include in accounting
records only transaction data expressed in money.
INTRO TO FINANCIAL ACCOUNTING EXAM 1
QUESTIONS WITH ANSWERS
Accounting consists of three basic activities-correct-answer-Identifies, records,
communicates
Who uses Accounting Data-correct-answer-External Users: Creditors and Investors
Recent Financial Scandals-correct-answer-Enron, WorldCom, HealthSouth, AIG
Sarbanes-Oxley Act of (SOX).-correct-answer-Added new criminal charges for
accounting scandals
Financial Statements-correct-answer-Balance Sheet
Income Statement
Statement of Stock Holder's Equity
Statement of Cash Flows
Note Disclosure
, 2|Page
Generally Accepted Accounting Principles (GAAP)-correct-answer-Standards
generally accepted and universally practiced
Standard Setting Bodies-correct-answer-Financial Accounting Standards Board
(FASB)
(SEC)
International Accounting Standards Board
(IASB)
Historical Cost Principle-correct-answer-dictates that companies record assets at
their cost.
Fair Value Principle-correct-answer-states that assets and liabilities should be
reported at a fair value
Monetary Unit Assumption-correct-answer-companies include in accounting
records only transaction data expressed in money.
