Accounting Principles
1. conservatism: During the preparation of the Furniture Company's financial statements, one of the accountants has to
decide between two alternative methods of valuing Uncollectible Accounts. He decides to choose the method that reports the
highest amount. Which constraint did the accountant follow?
2. Integrity and Objectivity: Joseph Miller, CPA, is preparing an audit for LRK Merchandising. During the audit year, the
finance officer for LRK was terminated and charged with embezzlement. Because the court has yet to hear the case and the
finance officer is a close friend of Miller, he chooses to exclude information regarding the case in the audit report. Which specific
rule of conduct does Miller violate?
3. Acts Discreditable: Bob Martin, CPA, delivers training workshops for CPA exam candidates. In acquiring resources for
his workshops, he offers each candidate $100 to provide him information on questions from the exam. Which specific rule of
conduct is Martin violating?
4. 21st Century skills: Mary has applied for a position as an accounting clerk for a local company. She listed as her
qualifications that she is a problem-solver and needs little direction to complete assigned tasks. These are classified as which type
of skills?
5. SEC: John has been a certified public accountant for 15 years. While auditing a publicly traded company, John finds
fraudulent information that is intended for the company's shareholders. Which governing body should John advise of the finding?
6. Independence: Bill Carpenter, a CPA, is the Western region board member for
NC FBLA. Bill's firm, Carpenter Associates, has been asked to prepare the audit for NC FBLA, and has asked that Bill be the lead
auditor for the job. What specific rule of conduct will prevent Bill from accepting the offer?
7. recognition concept: Hardwick Corporation is based in the United States. When preparing its financial statements, the
corporation failed to include a large credit sale to a customer in the general ledger, which was made on December 31st. What
concept is Hardwick Corporation violating?
8. 21st Century skills: John has applied for a position as chief financial officer for a Fortune 500 company. He listed as his
qualifications that he is a problem-solver, has the ability to plan, and can resolve issues. These are classified as which skills?
9. time period: The Furniture Company prepares its financial statements four times per year. Which assumption is the
Furniture Company following?
10. Conservatism Constraint: When the accountant has to choose between two acceptable alternatives, the accountant
should select the alternative that will report less profit, less asset amount, or a greater liability amount. This is based upon which
principle/guideline?
11. Form of Organization and Name: Buck Dollar recently completed his CPA certification and is opening an office. He
wants the business to be known as $AV-U-BUCK$. Which specific rule of conduct does this violate?
12. full disclosure principle: Harley's Hog BBQ owns and operates several barbecue restaurants. In 20XX, Harley, the
owner, took out a loan for his business in the amount of $100,000. The loan will be completely paid off within 6 months. When
preparing the financial statements of the business, Harley opted not to list the loan because it was so close to maturity. Which
principle did Harley's Hog BBQ violate? 13. IFRS: John, a certified public accountant, recently learned that a new set of principle-
based standards, interpretations, and frameworks have been adopted by the United States and other countries. To better prepare
himself, John should learn about what?
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1. conservatism: During the preparation of the Furniture Company's financial statements, one of the accountants has to
decide between two alternative methods of valuing Uncollectible Accounts. He decides to choose the method that reports the
highest amount. Which constraint did the accountant follow?
2. Integrity and Objectivity: Joseph Miller, CPA, is preparing an audit for LRK Merchandising. During the audit year, the
finance officer for LRK was terminated and charged with embezzlement. Because the court has yet to hear the case and the
finance officer is a close friend of Miller, he chooses to exclude information regarding the case in the audit report. Which specific
rule of conduct does Miller violate?
3. Acts Discreditable: Bob Martin, CPA, delivers training workshops for CPA exam candidates. In acquiring resources for
his workshops, he offers each candidate $100 to provide him information on questions from the exam. Which specific rule of
conduct is Martin violating?
4. 21st Century skills: Mary has applied for a position as an accounting clerk for a local company. She listed as her
qualifications that she is a problem-solver and needs little direction to complete assigned tasks. These are classified as which type
of skills?
5. SEC: John has been a certified public accountant for 15 years. While auditing a publicly traded company, John finds
fraudulent information that is intended for the company's shareholders. Which governing body should John advise of the finding?
6. Independence: Bill Carpenter, a CPA, is the Western region board member for
NC FBLA. Bill's firm, Carpenter Associates, has been asked to prepare the audit for NC FBLA, and has asked that Bill be the lead
auditor for the job. What specific rule of conduct will prevent Bill from accepting the offer?
7. recognition concept: Hardwick Corporation is based in the United States. When preparing its financial statements, the
corporation failed to include a large credit sale to a customer in the general ledger, which was made on December 31st. What
concept is Hardwick Corporation violating?
8. 21st Century skills: John has applied for a position as chief financial officer for a Fortune 500 company. He listed as his
qualifications that he is a problem-solver, has the ability to plan, and can resolve issues. These are classified as which skills?
9. time period: The Furniture Company prepares its financial statements four times per year. Which assumption is the
Furniture Company following?
10. Conservatism Constraint: When the accountant has to choose between two acceptable alternatives, the accountant
should select the alternative that will report less profit, less asset amount, or a greater liability amount. This is based upon which
principle/guideline?
11. Form of Organization and Name: Buck Dollar recently completed his CPA certification and is opening an office. He
wants the business to be known as $AV-U-BUCK$. Which specific rule of conduct does this violate?
12. full disclosure principle: Harley's Hog BBQ owns and operates several barbecue restaurants. In 20XX, Harley, the
owner, took out a loan for his business in the amount of $100,000. The loan will be completely paid off within 6 months. When
preparing the financial statements of the business, Harley opted not to list the loan because it was so close to maturity. Which
principle did Harley's Hog BBQ violate? 13. IFRS: John, a certified public accountant, recently learned that a new set of principle-
based standards, interpretations, and frameworks have been adopted by the United States and other countries. To better prepare
himself, John should learn about what?
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