ACC 6501 EXAM 1 REVIEW 121 QUESTIONS AND ANSWERS RATED 100% CORRECT.
What does it mean to state that the accounting process should support decisions and informed
judgments? - (ANSWER)It means that accounting is a service activity that helps many different users of
accounting information who use the information in many ways
What does it mean to work in public accounting? - (ANSWER)It means to perform professional services
for clients principally in the areas of auditing, income tases, management consulting, and/or accounting
systems evaluation and development.
What does it mean to be a CPA? - (ANSWER)It means that the individual has met the educational
requirements and has passed the uniform examination. Subsequently, the individual has met the
experience requirements and has applied for and been issued a license by the state board of
accountancy granting the individual the right to practice as a Certified Public Accounting.
What does it mean to state that generally accepted accounting principles are not a set of rules to be
blindly followed? - (ANSWER)It means that generally accepted accounting principles sometimes permit
alternative ways of accounting for identical transactions, thus requiring professional judgment, and that
these principles are still evolving
What does it mean when the FASB issues a new Accounting Standards Update? - (ANSWER)It means that
the FASB has completed an extensive process of research and development, including receiving input
from interested individuals and organizations, and has made an authoritative pronouncement (i.e., an
Update to the FASB codification) that defines accounting and reporting for a specific activity or
transaction and becomes a generally accepted accounting principle.
What does it mean that the FASB and IASB have been working together to achieve convergence? -
(ANSWER)It means that the FASB is committed to working with the IASB to ensure that a solution can be
reached whereby US accounting standards will eventually be merged with international accounting
standards to the greatest extent possible.
What does it mean to state that ethical behavior includes being objective and independent? -
(ANSWER)It means that the individual is impartial, free from conflict of interest, and will not receive a
personal gain rom the activity in which she or he is involved.
What does it mean to state that the objectives of financial reporting given in Statements of Financial
Accounting Concepts No. 8 provide a framework for this text? - (ANSWER)It means that the accounting
and financial reporting topics explained in the financial accounting part of the text should:
,ACC 6501 EXAM 1 REVIEW 121 QUESTIONS AND ANSWERS RATED 100% CORRECT.
- related to external financial reporting
- support business and economic decisions
- provide information about cash flows
- focus on earnings based on accrual accounting
- not seek to directly measure the value of a business enterprise
- report information that is subject to evaluation by individual financial statement users
What does it mean to say that there has been an accounting transaction between you and your school?
Give an example of such a transaction. - (ANSWER)It means that there has been some sort of economic
interchange; for example, you have agreed to pay tuition in exchange for classes.
What does it mean to refer to a balance sheet for the year ended August 31, 2020? - (ANSWER)It means
the persons doing this is really mixed up because the balance sheet presents data as a point in time. It's
a balance sheet as of August 31, 2020 and shows balances as that specific point in time rather than for a
period of time.
What does it mean when a balance sheet has been prepared for an organization? - (ANSWER)It means
that the organization's financial position at a point in time has been determined and summarized.
What does it mean when a stockholder says that she needs to look at her firm's set of four financial
statements to fully understand its financial position and results of operations? - (ANSWER)It means that
each financial statement provides unique information but focuses on only a part of the big picture, so all
four statements need to be reviewed to achieve a full understanding of the firm's financial position and
results of operation.
What does it mean when a company that has a high net income doesn't have enough cash to pay its
bills? - (ANSWER)It means that revenues have been earned from selling products or providing services
but that the accounts receivable from those revenues have not yet been collected - or if the receivables
have been collected, the cash has been used for some purpose other than paying bills.
What does it mean to say that the balance sheet must be in balance after every transaction even though
a lot of transactions affect the income statement? - (ANSWER)It means that transactions affecting the
, ACC 6501 EXAM 1 REVIEW 121 QUESTIONS AND ANSWERS RATED 100% CORRECT.
income statement also affect the stockholders' equity section of the balance sheet as well as the asset
and/or liability sections of the balance sheet.
What does matching of revenue and expense in the income statement mean? - (ANSWER)It means that
all expenses incurred in generating revenue for the period are subtracted from those revenues to
determine net income for that period. Matching does not mean that revenues equal expenses.
What does the accrual concept mean? - (ANSWER)It means that revenues and expenses are recognized
in the accounting period in which they are earned or incurred, even though cash may be received or
paid in a different accounting period.
What does it mean when some investors state that a corporation's published financial statements don't
tell the whole story about a firm's financial position and results of operations/ - (ANSWER)It means that
there may be both qualitative (e.g. workforce morale) and quantitative (e.g. opportunity cost) factors
that are not reflected int he financial statements.
Accounting is the process of: - (ANSWER)identifying, measuring, and communicating information about
an organization for the purpose of making decisions and informed judgments.
Primary users of a firm's accounting information include: - (ANSWER)management, employees,
investors, regulatory agencies
Accounting information is usually required for - (ANSWER)nearly every kind of organization
Accounting graduates are frequently employed in which of the following areas of practice? - (ANSWER)-
not-for-profit accounting, working as accountants for colleges or universities, hospitals, or voluntary
health and welfare organization
- industrial accounting, working as management accounts for manufacturing, merchandising, or services
firms
Identify the firms that are counted amongst the "Big 4" CPA firms. - (ANSWER)- Deloitte Touche
Tohmatsu (Deloitte)
- PricewaterhouseCoopers (known as PwC)
What does it mean to state that the accounting process should support decisions and informed
judgments? - (ANSWER)It means that accounting is a service activity that helps many different users of
accounting information who use the information in many ways
What does it mean to work in public accounting? - (ANSWER)It means to perform professional services
for clients principally in the areas of auditing, income tases, management consulting, and/or accounting
systems evaluation and development.
What does it mean to be a CPA? - (ANSWER)It means that the individual has met the educational
requirements and has passed the uniform examination. Subsequently, the individual has met the
experience requirements and has applied for and been issued a license by the state board of
accountancy granting the individual the right to practice as a Certified Public Accounting.
What does it mean to state that generally accepted accounting principles are not a set of rules to be
blindly followed? - (ANSWER)It means that generally accepted accounting principles sometimes permit
alternative ways of accounting for identical transactions, thus requiring professional judgment, and that
these principles are still evolving
What does it mean when the FASB issues a new Accounting Standards Update? - (ANSWER)It means that
the FASB has completed an extensive process of research and development, including receiving input
from interested individuals and organizations, and has made an authoritative pronouncement (i.e., an
Update to the FASB codification) that defines accounting and reporting for a specific activity or
transaction and becomes a generally accepted accounting principle.
What does it mean that the FASB and IASB have been working together to achieve convergence? -
(ANSWER)It means that the FASB is committed to working with the IASB to ensure that a solution can be
reached whereby US accounting standards will eventually be merged with international accounting
standards to the greatest extent possible.
What does it mean to state that ethical behavior includes being objective and independent? -
(ANSWER)It means that the individual is impartial, free from conflict of interest, and will not receive a
personal gain rom the activity in which she or he is involved.
What does it mean to state that the objectives of financial reporting given in Statements of Financial
Accounting Concepts No. 8 provide a framework for this text? - (ANSWER)It means that the accounting
and financial reporting topics explained in the financial accounting part of the text should:
,ACC 6501 EXAM 1 REVIEW 121 QUESTIONS AND ANSWERS RATED 100% CORRECT.
- related to external financial reporting
- support business and economic decisions
- provide information about cash flows
- focus on earnings based on accrual accounting
- not seek to directly measure the value of a business enterprise
- report information that is subject to evaluation by individual financial statement users
What does it mean to say that there has been an accounting transaction between you and your school?
Give an example of such a transaction. - (ANSWER)It means that there has been some sort of economic
interchange; for example, you have agreed to pay tuition in exchange for classes.
What does it mean to refer to a balance sheet for the year ended August 31, 2020? - (ANSWER)It means
the persons doing this is really mixed up because the balance sheet presents data as a point in time. It's
a balance sheet as of August 31, 2020 and shows balances as that specific point in time rather than for a
period of time.
What does it mean when a balance sheet has been prepared for an organization? - (ANSWER)It means
that the organization's financial position at a point in time has been determined and summarized.
What does it mean when a stockholder says that she needs to look at her firm's set of four financial
statements to fully understand its financial position and results of operations? - (ANSWER)It means that
each financial statement provides unique information but focuses on only a part of the big picture, so all
four statements need to be reviewed to achieve a full understanding of the firm's financial position and
results of operation.
What does it mean when a company that has a high net income doesn't have enough cash to pay its
bills? - (ANSWER)It means that revenues have been earned from selling products or providing services
but that the accounts receivable from those revenues have not yet been collected - or if the receivables
have been collected, the cash has been used for some purpose other than paying bills.
What does it mean to say that the balance sheet must be in balance after every transaction even though
a lot of transactions affect the income statement? - (ANSWER)It means that transactions affecting the
, ACC 6501 EXAM 1 REVIEW 121 QUESTIONS AND ANSWERS RATED 100% CORRECT.
income statement also affect the stockholders' equity section of the balance sheet as well as the asset
and/or liability sections of the balance sheet.
What does matching of revenue and expense in the income statement mean? - (ANSWER)It means that
all expenses incurred in generating revenue for the period are subtracted from those revenues to
determine net income for that period. Matching does not mean that revenues equal expenses.
What does the accrual concept mean? - (ANSWER)It means that revenues and expenses are recognized
in the accounting period in which they are earned or incurred, even though cash may be received or
paid in a different accounting period.
What does it mean when some investors state that a corporation's published financial statements don't
tell the whole story about a firm's financial position and results of operations/ - (ANSWER)It means that
there may be both qualitative (e.g. workforce morale) and quantitative (e.g. opportunity cost) factors
that are not reflected int he financial statements.
Accounting is the process of: - (ANSWER)identifying, measuring, and communicating information about
an organization for the purpose of making decisions and informed judgments.
Primary users of a firm's accounting information include: - (ANSWER)management, employees,
investors, regulatory agencies
Accounting information is usually required for - (ANSWER)nearly every kind of organization
Accounting graduates are frequently employed in which of the following areas of practice? - (ANSWER)-
not-for-profit accounting, working as accountants for colleges or universities, hospitals, or voluntary
health and welfare organization
- industrial accounting, working as management accounts for manufacturing, merchandising, or services
firms
Identify the firms that are counted amongst the "Big 4" CPA firms. - (ANSWER)- Deloitte Touche
Tohmatsu (Deloitte)
- PricewaterhouseCoopers (known as PwC)
