1.Generally accepted accounting principles

a.include detailed practices and procedures as well as broad guidelines of general

application.

b.are influenced by pronouncements of the SEC.

c.change over time as the nature of the business environment changes.

d.all of these.

2.Which of these statements regarding the IFRS and U.S. GAAP is correct?

a. U.S. GAAP is considered to be "principles-based" and more detailed than iGAAP.

b.U.S. GAAP is considered to be "rules-based" and less detailed than iGAAP.

c.IFRS is considered to be "principles-based" and less detailed than U.S. GAAP

d.Both U.S. GAAP and iGAAP are considered to be "rules-based", but U.S. GAAP tends

to be more complex.

3.A soundly developed conceptual framework of concepts and objectives should

a.increase financial statement users' understanding of and confidence in financial

reporting.

b.enhance comparability among companies' financial statements.

c.allow new and emerging practical problems to be more quickly solved.

d.all of these.

4.The pervasive criterion by which accounting information can be judged is that of

a.decision usefulness.

b.freedom from bias.

c.timeliness.

d.comparability.

5The two fundamental qualities that make accounting information useful for decision making are

a.comparability and timeliness.

b.materiality and neutrality.

c.relevance and faithful representation.

d.faithful representation and comparability.

6.Which of the following basic accounting assumptions is threatened by the existence of severe

inflation in the economy?

a.Monetary unit assumption.

b.Periodicity assumption.

c.Going-concern assumption.

d.Economic entity assumption

7.The basic accounting assumption that a business enterprise will not be sold or liquidated in the near future is known as the

a. economic entity assumption.

b.monetary unit assumption.

c.conservatism assumption.

d.none of these.

8.Proponents of historical cost ordinarily maintain that in comparison with all other valuation methods used for general purpose financial reporting, statements prepared using historical cost are more:

a.faithfully representative.

b.relevant.

c.indicative of the entity's purchasing power.

d.conservative.

9.Revenue generally should be recognized:

a.at the end of production.

b.at the time of cash collection.

c.when realized.

d.when the performance obligation is satisfied.

10.A company has a factory building that originally cost the company $250,000. The current fair

value of the factory building is $3 million. The president would like to report the difference as a

gain. The write-up would represent a violation of which accounting assumption or principle?

a.Revenue recognition principle

b.Going concern assumption

c.Measurement Principle - Historical cost.

d.Monetary unit assumption

11.A trial balance

a.proves that debits and credits are equal in the general ledger.

b.supplies a listing of accounts and their balances that are used in preparing

financial statements.

c.is normally prepared three times in the accounting cycle.

d.all of these.

12.How do these prepaid expenses expire?

Rent Supplies

a.With the passage of timeThrough use and consumption

b.With the passage of timeWith the passage of time

c.Through use and consumptionThrough use and consumption

d.Through use and consumptionWith the passage of time

13.Which of the following would not be a correct form for an adjusting entry?

a.A debit to a revenue and a credit to a liability

b.A debit to an expense and a credit to a liability

c.A debit to a liability and a credit to a revenue

d.A debit to an asset and a credit to a liability

14.Which of the following accounts is closed at the end of the reporting period??

a.Unearned Revenue

b.Salary Expense

c.Inventory

d.Retained Earnings

15. Information in the income statement helps users to

a.evaluate the past performance of the enterprise.

b.provide a basis for predicting future performance.

c. help assess the risk or uncertainty of achieving future cash flows.

d.all of these.

16. Comprehensive income includes all of the following except

a.dividend revenue.

b.losses on disposal of assets.

c.investments by owners.

d. unrealized holding gains.

17. Which of the following items will not appear in the retained earnings statement?

a.Net loss

b.Prior period adjustment

c.Discontinued operations

d.Dividends

18.Earnings per share data are required on the face of which of the following

financial statements?

a.Statement of retained earnings

b.Statement of stockholders' equity

c.Income statement

d.Balance sheet

19.Working capital is

a.capital which has been reinvested in the business.

b.unappropriated retained earnings.

c.not an indicator of liquidity

d.current assets minus current liabilities

20. The current assets section of the balance sheet should include

a. machinery.

b. patents.

c. goodwill.

d.inventory.

21. The net assets of a business are equal to

a.current assets minus current liabilities.

b.total assets plus total liabilities.

c.total assets minus long-term liabilities

d.total stockholders' equity

22.Purchasing marketable securities and disposing of property, plant, and equipment are

a.operating activities.

b.investing activities.

c.financing activities.

d.liquidity activities.

23.What is NOT a variable that is considered in interest computations?

a.Principal.

b.Interest rate.

c.Assets.

d.Time.

24.What is the primary difference between an ordinary annuity and an annuity due?

a.The timing of the periodic payment.

b.The interest rate.

c.Annuity due only relates to present values.

d.Ordinary annuity only relates to present values.

25. Present value is

a.the value now of a future amount.

b.the amount that must be invested now to produce a known future value.

c.always smaller than the future value.

d.all of these.