Exam (elaborations)
WALL STREET PREP ACCOUNTING QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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WALL STREET PREP ACCOUNTING QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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WALL STREET PREP ACCOUNTINGQUESTIONS AND ANSWERS WITH
SOLUTIONS 2024
FASB - ANSWER Financial Accounting Standards Board, which oversees GAAP through issuance of SFAS,
oversight by the SEC
SFAS - ANSWER Standard Financial Accounting Statements, issued by the FASB
AA,P,C: Accounting Entity - ANSWER The assumption that a corporation is an entity separate from any
person
AA,P,C: Going Concern - ANSWER The Assumption that a corporation will continue to exist for the
foreseeable future
AA,P,C: Measurement & Units - ANSWER The principle that financial statements can only show the
quantifiable assets or liabilities of a corporation
AA,P,C: Periodicity - ANSWER the principle that financial statements reflect a standard period of time,
usually years or quarters
AA,P,C: Historical Cost - ANSWER The principle that resources and liabilities are recorded at their initial
cost rather than a continuously updating value
AA,P,C: Revenue Recognition - ANSWER The principle that revenues are recorded when EARNED and
MEASURABLE
AA,P,C: Matching - ANSWER The principle that costs must be recorded in the same period that revenues
were generated
AA,P,C: Disclosure - ANSWER The principle that a corporation must reveal all relevant financial
information
, AA,P,C: Estimates and Judgement - ANSWER The constraint that estimates/predictions cannot always be
accurate
AA,P,C: Materiality - ANSWER The constraint that one transaction may be deemed relevant for one
company but not another, usually based on size
AA,P,C: Consistency - ANSWER The constraint that recording methods and assumptions may not always
be the same over time
AA,P,C: Conservatism - ANSWER The constraint that assets are usually understated and liabilities are not
understated, for example historical cost measurements
Income Statement - ANSWER depicts the revenues and expenses of a company over a given time period
Revenue - ANSWER proceeds from the goods or services offered for sale by a company
Cost of Goods Sold - ANSWER Represents the cost of manufacture or procurement for goods or services
that generate revenue (cost of inventory, factory overhead, raw materials, direct labor costs,
depreciation of fixed assets)
Gross Profit - ANSWER Revenue-Cost of Goods Sold, i.e. profit only after direct expenses have been
calculated
Selling, General and Administrative Expenses - ANSWER costs not directly associated with manufacture
or procurement of revenue driving goods or services
Research and Development Expenses - ANSWER costs associated with developing new products or
procedures
Depreciation - ANSWER a portion of the expense incurred by purchasing revenue generating assets such
as equipment. quantifies "wear and tear"
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