Accounting Principles Test

#1 Question:

What was the purpose of the Sarbanes Oxley act, in general?

• a. To allow for caps on management salaries
• b. To allow for price setting on the stock market
• c. To regulate employee pension funds
• d. To better regulate public and private companies in the wake of recent accounting scandals

Answer: d. To better regulate public and private companies in the wake of recent accounting scandals
User answers:
2013-05-29 11:33:24
d. To better regulate public and private companies in the wake of recent accounting scandals
http://www.sox-online.com/basics.html

Tested by xaf
http://en.wikipedia.org/wiki/Sarbanes%E2%80%93Oxley_Act


#2 Question:

How are third party adjustments to patient bills reflected in the financial statements?

• a. As an addition to revenue
• b. As a deduction from revenue
• c. As a liability
• d. As an asset

Answer: b. As a deduction from revenue
User answers:
2013-03-02 05:27:48
c. As a liability
2013-03-19 21:59:42
c. As a liability
2013-04-12 22:19:36
a. As an addition to revenue
2013-04-19 17:16:44
b. As a deduction from revenue
2013-04-20 08:25:44
b. As a deduction from revenue
2013-05-25 17:47:39
b. As a deduction from revenue
2013-05-31 09:43:53
b. As a deduction from revenue
2013-06-18 15:05:34
d. As an asset
2013-07-21 16:28:23
a. As an addition to revenue
2013-07-29 10:37:29
b. As a deduction from revenue
zxaf


#3 Question:

What is Form 10-K?

• a. Monthly filing with the SEC reporting salaries to the directors
• b. As needed filing to disclose any significant issues or changes
• c. Quarterly financial reports filed with the SEC
• d. Annual financial reports filed with the SEC

Answer: d. Annual financial reports filed with the SEC
User answers:
2013-04-09 19:47:17
d. Annual financial reports filed with the SEC
2013-05-29 11:47:55
d. Annual financial reports filed with the SEC
Tested by xaf
http://en.wikipedia.org/wiki/Form_10-K


#4 Question:

What is the accounting objective which best relates to the FIFO method?

• a. Tax Minimization
• b. Income Smoothing
• c. Profit Maximization
• d. Accurate Reporting

Answer: b. Income Smoothing
User answers:
2013-03-09 13:19:07
b. Income Smoothing
2013-05-29 12:03:13
b. Income Smoothing
Tested by xaf
http://www.accountingtools.com/fifo-method


#5 Question:

What is the accounting objective which best relates to the percentage of completion method?

• a. Conservatism
• b. Accurate Presentation
• c. Tax Minimization
• d. Income Smoothing

Answer: b. Accurate Presentation
User answers:
2013-04-09 19:50:58
b. Accurate Presentation
2013-06-02 22:20:46
b. Accurate Presentation
Tested by zxaf.
http://www.debtordebt.com/forum/what-is-the-accounting-objective-which-best-relates-to-the-percentag


#6 Question:

Companies of what size have been impacted the most by the SOX from a cost perspective?

• a. Mid-sized companies feel the impact the most
• b. There is no correlation between company size and the cost of implementing the provisions of the Act
• c. The larger companies as the larger the company, the more it has to pay to implement the provisions of the Act
• d. The smaller companies as the cost of implementing the provisions of the Act does not decrease proportionally with the size of the company

Answer: c. The larger companies as the larger the company, the more it has to pay to implement the provisions of the Act
User answers:
2012-10-05 12:28:02
d. The smaller companies as the cost of implementing the provisions of the Act does not decrease proportionally with the size of the company
2012-10-17 15:05:33
b. There is no correlation between company size and the cost of implementing the provisions of the Act
2013-02-12 12:29:41
b. There is no correlation between company size and the cost of implementing the provisions of the Act
2013-05-25 17:53:47
c. The larger companies as the larger the company, the more it has to pay to implement the provisions of the Act
2013-07-29 10:43:56
c. The larger companies as the larger the company, the more it has to pay to implement the provisions of the Act
zxaf


#7 Question:

What is the acronym for an organization that promotes the international harmonization of accounting standards?

• a. SEC
• b. IASC
• c. FASB
• d. None of the above

Answer: b. IASC
User answers:
2013-04-09 19:52:05
b. IASC
2013-06-02 22:42:41
b. IASC
Tested by zxaf.

SEC: Securities and Exchange Commission (SEC)
IASC: International Accounting Standards Committee
FASB: Financial Accounting Standards Board

http://evikurniawati56.blogspot.com/2012/05/international-accounting-harmonization.html
http://en.wikipedia.org/wiki/International_Accounting_Standards_Committee


#8 Question:

Which FASB sets the requirements for accounting for Non-Profit organizations?

• a. FASB SFAS 999
• b. FASB SFAS 100
• c. FASB SFAS 99
• d. FASB SFAS 117

Answer: d. FASB SFAS 117
User answers:
2013-04-09 19:56:46
d. FASB SFAS 117
2013-04-22 18:08:30
d. FASB SFAS 117
http://www.1800net.com/nprc/fasb117.html


#9 Question:

What is form 10-Q?

• a. Monthly filing with the SEC reporting director salaries
• b. As needed filing to disclose any significant issues or changes
• c. Quarterly financial reports filed with the SEC
• d. Annual financial reports filed with the SEC

Answer: c. Quarterly financial reports filed with the SEC
User answers:
2013-04-09 19:57:57
c. Quarterly financial reports filed with the SEC
2013-06-02 22:52:54
c. Quarterly financial reports filed with the SEC
Tested by zxaf.
http://en.wikipedia.org/wiki/Form_10-Q


#10 Question:

Which of the following is not an example of the accounting practices followed by a firm having wide flexibility in the choice of alternative methods for financial reporting?

• a. Accounting for depreciation
• b. Accounting for investment in common stocks
• c. Accounting for inventories
• d. None of the above

Answer: d. None of the above
User answers:
2013-07-03 16:02:08
d. None of the above
Tested by zxaf.


#11 Question:

What is the accounting objective which best relates to the straight line method?

• a. Profit Maximization
• b. Conservatism
• c. Tax Minimization
• d. None of the above

Answer: b. Conservatism
User answers:
2013-01-31 23:06:22
b. Conservatism
2013-04-19 17:01:17
c. Tax Minimization
2013-07-29 10:54:03
b. Conservatism
zxaf


#12 Question:

Which of the following accounts may appear on a company's balance sheet when the incomes for financial and tax reporting are different?

• a. Income tax expenses
• b. Deferred income tax liability
• c. Sales tax expenses
• d. All of the above

Answer: b. Deferred income tax liability
User answers:
2013-04-09 20:04:02
b. Deferred income tax liability
2013-07-29 11:09:19
b. Deferred income tax liability
zxaf


#13 Question:

Which doctrine lays down that a firm should account for a given set of operations so as to make reported net income as large as possible?

• a. Least and latest rule
• b. Profit maximization
• c. Income smoothing
• d. None of the above

Answer: b. Profit maximization
User answers:
2013-06-08 22:21:23
b. Profit maximization
Profit Maximization
2013-07-29 11:47:16
b. Profit maximization
zxaf


#14 Question:

What is the accounting objective which best relates to the Lower of Cost or Market Price method?

• a. Accurate Presentation
• b. Tax Minimization
• c. Profit Maximization
• d. Conservatism

Answer: d. Conservatism
User answers:
2012-11-20 20:20:23
d. Conservatism
2013-07-29 13:29:50
d. Conservatism
zxaf
http://www.accountingcoach.com/online-accounting-course/27Xpg01.html


#15 Question:

In which years were the Securities & Exchange Acts created?

• a. 1980 and 1981
• b. 1933 and1934
• c. 1920 and 1930
• d. 1802 and 1920

Answer: b. 1933 and1934
User answers:
2013-06-08 22:25:53
b. 1933 and1934
2013-07-06 12:55:40
b. 1933 and1934
Tested by zxaf.

http://en.wikipedia.org/wiki/Securities_Act_of_1933
http://en.wikipedia.org/wiki/Securities_Exchange_Act_of_1934


#16 Question:

What is the accounting objective which best relates to the expensing of R&D costs?

• a. Income Smoothing
• b. Accurate Reporting
• c. Conservatism
• d. Profit Maximization

Answer: a. Income Smoothing
User answers:
2013-01-13 11:01:01
a. Income Smoothing
2013-07-29 13:39:20
a. Income Smoothing
zxaf


#17 Question:

What is the accounting objective which best relates to the weighted average inventory method?

• a. Tax Minimization
• b. Income Smoothing
• c. Profit Maximization
• d. None of the above

Answer: b. Income Smoothing
User answers:
2013-06-08 22:29:02
b. Income Smoothing
2013-07-29 13:48:53
b. Income Smoothing
zxaf


#18 Question:

What is the qualitative accounting objective suggesting that information reported in a financial statement should correspond as precisely as possible to the economic effects underlying transactions and events?

• a. Conceptual Framework
• b. Quality of Financial Position
• c. Accurate Presentation
• d. Least and Latest Rule

Answer: c. Accurate Presentation
User answers:
2013-02-01 07:05:39
a. Conceptual Framework
2013-04-02 03:10:04
b. Quality of Financial Position
2013-07-29 14:03:00
b. Quality of Financial Position
zxaf
2013-07-29 22:04:50
c. Accurate Presentation
zxaf2


#19 Question:

How is an unconditional promise to give a donation to a charity accounted for by the charity?

• a. Not recorded at all until 100% contribution is received
• b. Never recorded even after receipt
• c. As revenue only when the donation is made
• d. As revenue when the promise is made

Answer: c. As revenue only when the donation is made
User answers:
2012-10-04 20:21:29
c. As revenue only when the donation is made


#20 Question:

What is the accounting objective which best relates to the completed contract method?

• a. Income Smoothing
• b. Profit Maximization
• c. Tax Minimization
• d. None of the above

Answer: a. Income Smoothing
User answers:
2012-10-04 20:21:58
a. Income Smoothing
2013-02-15 11:29:23
a. Income Smoothing
A
2013-07-29 14:11:02
a. Income Smoothing
zxaf


#21 Question:

What change was made in regarding the penalization of the whistleblowers (people who alert the authorities about the illegal activities in a corporation) by the companies?

• a. They are now themselves subject to fraud charges for uncovering the crimes
• b. They are put under witness protection
• c. They are offered a transfer to a new department
• d. They are now protected against retaliation by the company in order to encourage employees to bring the wrong doings of the companies to light

Answer: d. They are now protected against retaliation by the company in order to encourage employees to bring the wrong doings of the companies to light
User answers:
2013-02-15 11:30:48
d. They are now protected against retaliation by the company in order to encourage employees to bring the wrong doings of the companies to light


#22 Question:

What is the acronym for the agency authorized by the U.S. Congress to regulate the financial reporting practices of most public corporations?

• a. SEC
• b. IASC
• c. FASB
• d. None of the above

Answer: a. SEC
User answers:
2013-01-01 15:35:27
d. None of the above
2013-04-19 17:13:18
a. SEC
2013-07-29 14:17:23
a. SEC
zxaf


#23 Question:

What is 'paying the least amount of taxes as late as possible within the law to minimize the present value of tax payments for a given set of operations' a description of?

• a. Profit Maximization
• b. Least and Latest Rule
• c. Conservatism
• d. Income Smoothing

Answer: b. Least and Latest Rule
User answers:
2013-04-09 20:33:49
b. Least and Latest Rule


#24 Question:

Which of the following methods is normally considered to be acceptable for financial reporting?

• a. MACRS
• b. Lower of cost or market price for inventories
• c. Direct write off of uncollectible accounts
• d. Capitalization of R&D Costs

Answer: a. MACRS
User answers:
2013-07-06 13:12:26
a. MACRS
Tested by zxaf.
http://en.wikipedia.org/wiki/MACRS


#25 Question:

Which of the following is a valid criticism of the SOX?

• a. It has made regulations more strict
• b. It has made foreign companies reluctant to register on US stock exchanges due to the burden of SOX reporting
• c. It allows for looser corporate standards
• d. It makes a few people accountable for the misdeeds of a corporation

Answer: b. It has made foreign companies reluctant to register on US stock exchanges due to the burden of SOX reporting
User answers:
2012-09-16 10:31:40
b. It has made foreign companies reluctant to register on US stock exchanges due to the burden of SOX reporting
2013-02-23 19:49:33
c. It allows for looser corporate standards
2013-05-10 11:28:36
b. It has made foreign companies reluctant to register on US stock exchanges due to the burden of SOX reporting


#26 Question:

What is the effect of the SOX on public companies?

• a. It has made regulations more strict
• b. It has added accountability to the upper management
• c. It has forced companies to look at their internal controls
• d. All of the above

Answer: a. It has made regulations more strict
User answers:
2012-11-26 02:46:04
a. It has made regulations more strict


#27 Question:

Which of the following is true of the Sarbanes Oxley Act?

• a. It has bolstered investor confidence
• b. It has increased all stock prices
• c. It has increased the number of foreign corporations registering in the US
• d. It has created more work for corporate accounting departments

Answer: a. It has bolstered investor confidence
User answers:
2013-06-19 16:00:21
a. It has bolstered investor confidence


#28 Question:

What change was made to the internal controls of the companies by the SOX?

• a. All company processes and related internal controls now need to be documented and then tested by an outside auditing firm
• b. Companies no longer have to document their internal controls since the auditors do the job
• c. Internal controls can be more lax than before
• d. Companies have to provide for internal controls only to satisfy the auditors

Answer: c. Internal controls can be more lax than before
User answers:
2013-05-07 07:52:51
c. Internal controls can be more lax than before


#29 Question:

What are the 3 types of Health Care Organizations for accounting purposes?

• a. Incorporated, Limited Liability, Sole Proprietor
• b. Asset based, Liability based, Expense based
• c. Investor-owned, Non-Profit, Governmental
• d. Private, Public, LLC

Answer: c. Investor-owned, Non-Profit, Governmental
User answers:
2013-05-07 07:53:16
a. Incorporated, Limited Liability, Sole Proprietor
2013-06-30 21:46:28
d. Private, Public, LLC
2013-07-25 22:52:32
d. Private, Public, LLC
2013-07-29 20:32:56
c. Investor-owned, Non-Profit, Governmental
zxaf


#30 Question:

What is the acronym for an independent board responsible, since 1973, for establishing generally accepted accounting principles?

• a. SEC
• b. IASC
• c. FASB
• d. None of the above

Answer: c. FASB
User answers:
2013-06-08 22:46:52
c. FASB
2013-07-06 13:34:42
c. FASB
Tested by zxaf.
http://en.wikipedia.org/wiki/Financial_Accounting_Standards_Board


#31 Question:

Who can review the filings made by public companies with the SEC?

• a. Only company executives
• b. Anyone using the EDGAR system
• c. Only law enforcement officials
• d. Only the staff of the SEC and the company executives

Answer: b. Anyone using the EDGAR system
User answers:
2012-11-05 23:53:28
b. Anyone using the EDGAR system
2013-07-06 13:40:42
b. Anyone using the EDGAR system
Tested by zxaf.

http://en.wikipedia.org/wiki/EDGAR
http://en.wikipedia.org/wiki/SEC_filing


#32 Question:

What are forms 10K and 10Q referred to as?

• a. Periodic Filings
• b. Financial Statements
• c. Information Returns
• d. Tax Returns

Answer: a. Periodic Filings
User answers:
2013-07-06 13:45:42
a. Periodic Filings
Tested by zxaf.

http://en.wikipedia.org/wiki/Form_10-Q
http://en.wikipedia.org/wiki/Form_10-K


#33 Question:

What is the purpose of a Registration Statement?

• a. To offer securities to the public
• b. To disclose the operations during the first year
• c. To provide information to the public about a company before it is traded publicly
• d. Financial records for the company from inception to date

Answer: c. To provide information to the public about a company before it is traded publicly
User answers:
2013-07-29 17:22:49
c. To provide information to the public about a company before it is traded publicly
zxaf
http://en.wikipedia.org/wiki/Registration_statement


#34 Question:

What value should a contribution be accounted for at?

• a. Historical value
• b. Fair value
• c. Market value
• d. Value determined by auditors

Answer: d. Value determined by auditors
User answers:
2013-07-29 17:37:08
d. Value determined by auditors
zxaf

c. Market value. // If market exists.

d. Value determined by auditors. // If market does not exists.


#35 Question:

When is revenue normally recognized for financial reporting?

• a. At the point of sale
• b. While cash is being collected
• c. After all cash has been collected
• d. At the end of each year

Answer: c. After all cash has been collected
User answers:
2013-07-29 17:28:32
c. After all cash has been collected
zxaf


#36 Question:

Which of the following methods would be employed to help accomplish the following objective: smoothing a firm's income as a means of minimizing large fluctuations in the price of its stock.

• a. Weighted average inventory
• b. Percentage of completion method for long term construction contracts
• c. Straight line amortization of patents
• d. All of the above

Answer: a. Weighted average inventory
User answers:
2013-06-08 22:51:55
a. Weighted average inventory


#37 Question:

For which of the following would the use of the straight-line method of amortization be acceptable?

• a. Building
• b. Patent
• c. Goodwill
• d. All of the above

Answer: d. All of the above
User answers:
2013-07-29 17:13:57
d. All of the above
zxaf


#38 Question:

What is the accounting objective which best relates to the disclosing of the cost of employee stock options (not expensing)?

• a. Conservatism
• b. Profit Maximization
• c. Income Smoothing
• d. Tax Minimization

Answer: a. Conservatism
User answers:
2013-06-18 17:27:12
a. Conservatism


#39 Question:

What change was made by the Act regarding the authority competent to sign the company tax returns?

• a. Only the CEO now has the authority to sign the company tax returns
• b. Any employee can now sign a tax return
• c. Only the firm's CPA can sign the tax returns
• d. Only the person who has prepared the return can sign it

Answer:


#40 Question:

What is form 8-K?

• a. Monthly filing with the SEC reporting director salaries
• b. As needed filing to disclose any significant issues or changes
• c. Quarterly financial reports filed with the SEC
• d. Annual financial reports filed with the SEC

Answer: b. As needed filing to disclose any significant issues or changes
User answers:
2013-06-08 23:08:48
d. Annual financial reports filed with the SEC
2013-07-30 00:19:52
b. As needed filing to disclose any significant issues or changes

Form 8-K is a very broad form used to notify investors of any material event that is important to shareholders or the United States Securities and Exchange Commission. This is one of the most common types of forms filed with the SEC. After a significant event like bankruptcy or departure of a CEO,
zxaf


#42 Question:

For which of the following accounts would the use of 'the lower of cost or market price' principle be acceptable?

• a. Inventory
• b. Land
• c. Prepaid rent
• d. All of the above

Answer: a. Inventory
User answers:
2013-06-18 17:28:47
a. Inventory


#43 Question:

What is the acronym for the independent board responsible, since 1973, for establishing generally accepted accounting principles?

• a. GAAP
• b. IASC
• c. SEC
• d. FASB

Answer: d. FASB
User answers:
2012-12-12 00:28:11
d. FASB
2013-06-18 17:29:06
d. FASB
2013-06-21 04:04:34
b. IASC
2013-07-06 13:55:56
d. FASB
Tested by zxaf.
http://en.wikipedia.org/wiki/Financial_Accounting_Standards_Board


#44 Question:

What entry would a donor make when giving a cash donation to a charity?

• a. Dr: Revenue, Cr: Cash
• b. Dr: Expense – Cash, Cr: Cash
• c. Dr: Liability, Cr: Cash
• d. Dr: Expense – Contributions, Cr: Cash

Answer: a. Dr: Revenue, Cr: Cash
User answers:
2013-06-18 17:29:28
a. Dr: Revenue, Cr: Cash


#45 Question:

Which of the following is a method of accounting for the exploration costs of a mineral resource that would best attain the objective of income tax accounting?

• a. Expense in total when incurred
• b. Capitalize only the costs related to mineral deposits
• c. Capitalize all costs associated with productive as well as non-productive mineral deposits
• d. None of the above

Answer: a. Expense in total when incurred
User answers:
2013-01-20 06:51:23
b. Capitalize only the costs related to mineral deposits
2013-07-29 14:33:56
a. Expense in total when incurred
zxaf


#46 Question:

What is the accounting objective which best relates to the double declining balance method?

• a. Conservatism
• b. Income Smoothing
• c. Profit Maximization
• d. Tax Minimization

Answer: a. Conservatism
User answers:
2012-09-28 10:08:32
a. Conservatism
2012-10-04 20:13:28
a. Conservatism


#47 Question:

Which of the following must generally be used for financial reporting if it is used for income tax reporting?

• a. FIFO
• b. LIFO
• c. NIFO
• d. Installment sales method

Answer: a. FIFO
User answers:
2013-07-29 17:53:52
a. FIFO
zxaf


#48 Question:

How are services donated by a CPA accounted for by a non-profit organization?

• a. Dr: Expenses, Cr: Revenue
• b. Dr: Revenue, Cr: Liability
• c. Dr: Expenses, Cr: Assets
• d. Dr: Revenue, Cr: Expenses

Answer: b. Dr: Revenue, Cr: Liability
User answers:
2013-07-29 14:32:37
d. Dr: Revenue, Cr: Expenses
zxaf
2013-07-29 20:38:36
b. Dr: Revenue, Cr: Liability
zxaf2


#49 Question:

What new board was created as part of the Sarbanes Oxley Act?

• a. SEC – Securities and Exchange Commission
• b. IRS – Internal Revenue Service
• c. PCAOB – Public Company Accounting Oversight Board
• d. GAAP – Generally Accepted Accounting Principles

Answer: c. PCAOB – Public Company Accounting Oversight Board
User answers:
2013-06-22 02:16:52
c. PCAOB – Public Company Accounting Oversight Board


#50 Question:

What is the accounting objective which best relates to the percentage of sales method for uncollectible accounts?

• a. Accurate Presentation
• b. Tax Minimization
• c. Profit Maximization
• d. Conservatism

Answer: a. Accurate Presentation
User answers:
2013-01-18 00:11:14
a. Accurate Presentation


#51 Question:

What factors affect the balance sheet, given the articulation of the income statement with the balance sheet and the factors that imply high or low quality of earnings?

• a. Quality of Financial Position
• b. Profit Maximization
• c. Quality of Earnings
• d. Conceptual Framework

Answer: a. Quality of Financial PositionUser answers:
2012-11-09 09:33:00
b. Profit Maximization
2012-11-28 05:46:44
c. Quality of Earnings
2013-03-28 16:30:33
a. Quality of Financial Position