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ACCOUNTING CRASH COURSE ACTUAL EXAM 2024 NEWEST FROM WALL STREET PREP 160 QUESTIONS WITH DETAILED VERIFIED ANSWERS / WSP ACCOUNTING CRASHCOURSE ACTUAL LATEST EXAM/ WALLSTREET PREP$17.99
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ACCOUNTING CRASH COURSE
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ACCOUNTING CRASH COURSE ACTUAL EXAM 2024
NEWEST FROM WALL STREET PREP 160 QUESTIONS
WITH DETAILED VERIFIED ANSWERS / WSP
ACCOUNTING CRASHCOURSE ACTUAL LATEST EXAM/
WALLSTREET PREP
Accounting is important for - ANSWER: firm's officers, investors, lenders, and the
general public
Generally Accepted Accounting Principles (GAAP) - ANSWER: a set of accounting
standards that is used in the preparation of financial statements
Securities and Exchange Commission (SEC) - ANSWER: -division of corporate finance:
oversees financial reporting by corporations
Financial Accounting Standards Board (FASB) - ANSWER: Types of pronouncements:
-Statements of Financial Accounting Standards
-Interpretations
-Financial Accounting Concepts
-Emerging Issues Task Force Statements
International Financial Reporting Standards (IFRS) - ANSWER: unified set of
international accounting standards
Assumption 1: Accounting Entity - ANSWER: -a company is considered a separate
"living" enterprise apart from its owners
-it is engaged in clearly-defined activities
-regularly reports its financial health to the general publics
-pays taxes and can file lawsuits
Assumption 2: Going Concern - ANSWER: -a corporation is assumed to remain in
existence indefinitely
-assets and liabilities are recognized values that assume the company will not have
to sell them at liquidation
Assumption 3: Measurement - ANSWER: -financial statements must be reported in
the national monetary unit
-can only show measurable activities of a corporation
Assumption 4: Periodicity - ANSWER: -companies are required to file annual and
interim reports
-a fiscal year is frequently but not always aligned with the calendar year
Principle 1: Historical Cost - ANSWER: -financial statements report companies'
resources at an initial historical cost
,-represents the easiest measurement method without a need a for appraisal and
revaluation
-minimized management discretion and subjectivity
-IFRS is more willing to allow this subjectivity to avoid misrepresenting the true value
of assets
Principle 2: Revenue Recognition - ANSWER: accrual basis of accounting dictates that
revenues must be recorded when earned and measurable
-cannot be recorded until the order is shipped to a customer and collection from that
customer (who uses a credit card) is reasonably assured
Principle 3: Matching Principle - ANSWER: costs associated with making a product
must be recorded during the same period as revenue generated from that product
Principle 4: Full Disclosure - ANSWER: companies must reveal all relevant economic
information that they determine to make a difference to its users
-should be accomplished in: financial statements, notes to financial statements, and
supplementary information
Contraint 1: Estimates & Judgements - ANSWER: certain measurements cannot be
performed completely accurately and must therefore utilize conservative estimates
and judgements
Constraint 2: Materiality - ANSWER: inclusion and disclosure of financial transactions
in financial statements hinge on their size and effect on the company performing
them
-materiality varies across different entities
Constraint 3: Consistency - ANSWER: for each company, the preparation financial
statements must utilize measurement techniques and assumptions which are
consistent from one period to another
Constraint 4: Conservatism - ANSWER: financial statements should be prepared with
a downward measurement bias
-assets and revenues should not be overstates, while liabilities and expenses should
not be understated
Form 10-K - ANSWER: -required annual filing
-must be filed within 60-90 days within year end
-provides the most detailed overview of companies' financial operations and
regulations governing them
Form 10-Q - ANSWER: -publicly-traded companies file a quarterly report with the SEC
for the first three quarters
-must be filed within 40-45 days of quarter end
10-K vs. 10-Q - ANSWER: -10-K's are more detailed
, -10-K reports are audited by an independent firm while 10-Q filings are reviewed by
a CPA but are unaudited
Form 8-K - ANSWER: required filing any time a company undergoes or announces a
materially significant event such as a n earnings press release, an acquisition, a
disposal of assets, bankruptcy, etc.
-usually filed within 4 days of the event
Form 14A (Proxy Statement) - ANSWER: -required filing prior to companies' annual
shareholder meetings
-contains detailed information about top officers and their compensations
Important Sections of the 10-K - ANSWER: -Item 6: selected financial data
-Item 7: Management's Discussion and Analysis of Financial Condition and Results of
Operations
-Item 8: Financial Statements and Supplementary Data
The regulating body that oversees the development of accounting standards in the
U.S. is: - ANSWER: FASB
FASB formulates accounting standards through the issuance of Statements of
Financial Accounting Standards (SFAS). These statements make up the body of
accounting rules known as the Generally Accepted Accounting Principles (GAAP).
IASB oversees international financial reporting standards (IFRS).
Which of the following statements is TRUE? - ANSWER: GAAP requires that firms
show recorded values for acquired intangible assets such as patents and trademarks
on their financial statements
GAAP requires that firms only show measurable activities, such as the value of
acquired intangible assets. Assets such as employee, customer loyalty and internally-
developed trademarks are not shown on financial statements because they're
difficult to quantify.
Which of the following statements is TRUE? - ANSWER: Publicly traded US companies
are required to file three 10-Q's and one 10-K annually.
Publicly-traded US companies must file three quarterly (10-Q) reports at the end of
their 1Q, 2Q and 3Q, and a 10-K at the end of their fiscal year.
The income statement is designed to measure: - ANSWER: The profits of a firm over
a period of time.
The income statement is designed to show the profitability of a business (revenues
less expenses) over a period of time (usually a quarter or year). The income
statement is an accrual measure of profits and thus not the best measure of cash
flows. It is also a poor measure of a company's liquidity or solvency, which involves
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