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Financial Accounting Exam 1 (Chapters 1-4) Questions with Complete Solutions
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Revenue should not be recognized until: - Answer-the earnings process is complete and collection is reasonably assured The matching principle is: - Answer-An accrual accounting principle A cause and effect relationship between revenue and expense is best exemplified by: - Answer-Units of prod...

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  • August 21, 2024
  • 10
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • financial accounting exam 1 chapters 1 4 questio
  • revenue should not be recognized until answer t

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Financial Accounting Exam 1 (Chapters
1-4) Questions with Complete Solutions
Revenue should not be recognized until: - Answer-the earnings process is complete and
collection is reasonably assured

The matching principle is: - Answer-An accrual accounting principle

A cause and effect relationship between revenue and expense is best exemplified by: -
Answer-Units of production depreciation expense

The expense that least fits a cause and effect relationship for matching revenues and
expenses would be: - Answer-Advertising expense (not COGS, units of production
depreciation, or sales commission)

TRUE OR FALSE: Purchased $8200 of inventory on account

Purchases 8200
Accounts Payable 8200 - Answer-True

TRUE OR FALSE: Paid weekly salaries $1000

Salaries Expense 1000
Cash 1000 - Answer-True

TRUE OR FALSE: Recorded $12000 sales for first week, $7000 for cash and $5000 on
account

Cash 7000
Accounts Payable 5000
Sales Revenue 12000 - Answer-False

TRUE OR FALSE: Paid for inventory purchased previously

Accounts Payable 8200
Cash 8200 - Answer-True

Users of financial reports include all the following: - Answer-Creditors, Government
Agencies, Unions

The process by identifying, measuring, analyzing, and communicating financial
information needed by management to plan, evaluate, and control an organization's
operations is called: - Answer-Managerial Accounting

, Which of the following is not an objective of financial reporting: - Answer-Provide
information on the liquidation value of an enterprise.

The actual objectives include providing info that is
- useful in investment and credit decisions
- about enterprise resources, claims to those resources, and changes to them
- useful in assessing cash flow prospects

Accrual accounting is used because: - Answer-It provides a better indication of ability to
generate cash flows than the cash basis

The role of SEC in the formulation of accounting principles can be described as: -
Answer-Sometimes primary and sometimes secondary

The body that has the power to prescribe the accounting principles and standards to be
employed by companies that fall under its jurisdiction is the: - Answer-FASB

Companies that are listed on the stock exchange are required to submit their financial
statements to the: - Answer-SEC

The FASB employs a "due process" system which: - Answer-Enables interested parties
to express their views on issues under consideration

The purpose of Statements of Financial Accounting Concepts is to: - Answer-Form a
conceptual framework for solving existing and emerging problems

Members of the FASB are: - Answer-Independent of any other org

The objectives of financial reporting include all of the following except to provide info
that: - Answer-Is useful to the Internal Revenue Service (IRS) in allocating the tax
burden to the business community

It actually includes providing info that...
- is useful to those making investment and credit decisions
- is helpful in assessing future cash flows
- identifies the economic resources (assets), claims to those resources (liabilities) and
the changes in those resources and claims

The two primary qualities that make accounting info useful for decision making are: -
Answer-Relevance and Reliability

Information is neutral if it: - Answer-Is free from bias toward a predetermined result

The characteristic that is demonstrated when a high degree of consensus can be
secured among interdependent measures using the same measurement methods is: -
Answer-Verifiability

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