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INTERMEDIATE ACCOUNTING #1 TEST REVIEW QUESTIONS WITH COMPLETE ANSWERS
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INTERMEDIATE ACCOUNTING #1 TEST REVIEW QUESTIONS WITH COMPLETE ANSWERS
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INTERMEDIATE ACCOUNTING #1 TESTREVIEW QUESTIONS WITH COMPLETE
ANSWERS
According to the conceptual framework, the usefulness of providing information in
financial statements is subject to the constraint of: - Answer-cost-benefit
Which of the following is a constraint recognized by the Conceptual Framework? -
Answer-cost
Generally, revenues are recognized when the: - Answer-performance obligation is
satisfied
A patent, purchased in year 1 and being amortized over a 10-year life, was determined
to be worthless in year 5. The write-off of the asset in year 5 is an example of which of
the following principles? - Answer-immediate recognition
According to the conceptual framework, the objectives of financial reporting for business
enterprises are based on - Answer-the needs of the users of the information
A conceptual framework establishes the concepts that provide guidance on - Answer-
identifying the boundaries of financial reporting; how transactions, events and
circumstances should be recognized and measured; selecting the transactions, other
events, and circumstances to be represented.
Which of the following characteristics of accounting information primarily allows users of
financial statements to generate predictions about an organization? - Answer-relevance
Which of the following characteristics means that information is reasonably free from
error and bias? - Answer-faithful representation
Depreciation and amortization policies are justifiable and appropriate only if we assume
some permanence to the company because of the: - Answer-going concern assumption
The assumption that implies that the economic activities of an enterprise can be
identified with a particular unit of accountability is the: - Answer-economic entity
assumption
Adjusting entries - Answer-are made at the end of an accounting period to bring all
accounts up to date on an accrual basis
, Factors that shape an accounting information system include the - Answer-informational
demands of management; transactions in which the business engages; volume of data
to be handled
Which of the following is an internal event? - Answer-Using machinery in operations
________ is the process of transferring the accounts and amounts from the book of
original entry to the ledger accounts. - Answer-Posting
The difference between the cost of a depreciable asset and its related contra account,
accumulated depreciation is referred to as the asset's: - Answer-book value
Transactions are initially recorded in the general journal. T/F - Answer-true
An accrued expense is - Answer-an expense that has been incurred but for which
payment has not yet been made.
The book value of any depreciable asset is the difference between its cost and its
salvage value. T/F - Answer-false
Adjusting entries are required every time a company prepares financial statements. T/F
- Answer-true
The accounting cycle fora merchandiser is the same as the accounting cycle for a
service firm. T/F - Answer-true
In the single-step income statement: - Answer-just two groupings exist -- revenues and
expenses
A multiple-step incomes statement - Answer-highlights certain intermediate components
of income that analysts use to compute ratios for assessing the performance of the
company; separates operating transactions from nonoperating transactions; matches
costs and expenses with related revenues.
The income statement reveals - Answer-net earnings (net income) of a firm for a period
of time
Expenses include all of the following except: - Answer-dividends
Which of the following is not included in the operating section of a multiple-step income
statement? - Answer-income tax expense
The gain or loss from disposal of a component of a business is shown as a: - Answer-
part of discontinued operations
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