Accounting 205 Exam 1

A trial balance: a. is the same under IFRS and GAAP. b. proves that transactions are recorded correctly. c. proves that all transactions have been recorded. d. will not balance if a correct journal entry is posted twice

a

As a result of the revenue recognition project being undertaken by the FASB and IASB: a. revenue recognition places more emphasis on when the performance obligation is satisfied. b. revenue recognition places more emphasis on when revenue is realized. c. revenue recognition places more emphasis on when expenses are incurred. d. revenue is no longer recorded unless cash has been received.

a

IFRS is considered to be more: a. principles-based and less rules-based than GAAP. b. rules-based and less principles-based than GAAP. c. detailed than GAAP. d. None of the above.

a

IFRS: a. uses accrual accounting. b. uses cash-basis accounting. c. allows revenue to be recognized when a customer makes an order. d. requires that revenue not be recognized until cash is received.

a

Which of the following financial statements is prepared as of a specific date? a. Balance sheet. b. Income statement. c. Retained earnings statement. d. Statement of cash flows.

a

Combining the activities of Kellogg and General Mills would violate the a. cost principle. b. economic entity assumption. c. monetary unit assumption. d. ethics principle.

b

Current assets under IFRS are listed generally: a. by importance. b. in the reverse order of their expected conversion to cash. c. by longevity. d. alphabetically.

b

Patents and copyrights are a. Current assets. b. Intangible assets. c. Long-term investments. d. Property, plant, and equipment.

b

Which of the following is not a long-term liability? a. Bonds payable b. Current maturities of long-term obligations c. Long-term notes payable d. Mortgages payable

b

Which of the following statements is false? a. Assets equals liabilities plus equity. b. Under IFRS, companies sometimes net liabilities against assets to report "net assets." c. The FASB and IASB are working on a joint conceptual framework project. d. Under IFRS, the statement of financial position is usually referred to as the statement of assets and equity.

b

Which statement is correct regarding IFRS? a. IFRS reverses the rules of debits and credits, that is, debits are on the right and credits are on the left. b. IFRS uses the same process for recording transactions as GAAP. c. The chart of accounts under IFRS is different because revenues follow assets. d. None of the above statements are correct.

b

A business organized as a separate legal entity under state law having ownership divided into shares of stock is a a. proprietorship. b. partnership. c. corporation. d. sole proprietorship.

c

A trial balance will not balance if: a. a correct journal entry is posted twice. b. the purchase of supplies on account is debited to Supplies and credited to Cash. c. a $100 cash drawing by the owner is debited to Owner's Drawing for $1,000 and credited to Cash for $100. d. a $450 payment on account is debited to Accounts Payable for $45 and credited to Cash for $45.

c

Debits: a. increase both assets and liabilities. b. decrease both assets and liabilities. c. increase assets and decrease liabilities. d. decrease assets and increase liabilities

c

One difference between IFRS and GAAP is that: a. GAAP uses accrual-accounting concepts and IFRS uses primarily the cash basis of accounting. b. IFRS uses a different posting process than GAAP. c. IFRS uses more fair value measurements than GAAP. d. the limitations of a trial balance are different between IFRS and GAAP.

c

The Sarbanes-Oxley Act determines: international tax regulations. a. internal control standards as enforced by the IASB. b. internal control standards of c. U.S. publicly traded companies. d. U.S. tax regulations.

c

The correct order of presentation in a classified balance sheet for the following current assets is: a. accounts receivable, cash, prepaid insurance, inventory. b. cash, inventory, accounts receivable, prepaid insurance. c. cash, accounts receivable, inventory, prepaid insurance. d. inventory, cash, accounts receivable, prepaid insurance.

c

The time period assumption states that: a. revenue should be recognized in the accounting period in which it is earned. b. expenses should be matched with revenues. c. the economic life of a business can be divided into artificial time periods. d. the fiscal year should correspond with the calendar year.

c

Which of the following statements is incorrect concerning the adjusted trial balance? a. An adjusted trial balance proves the equality of the total debit balances and the total credit balances in the ledger after all adjustments are made. b. The adjusted trial balance provides the primary basis for the preparation of financial statements. c. The adjusted trial balance lists the account balances segregated by assets and liabilities. d. The adjusted trial balance is prepared after the adjusting entries have been journalized and posted.

c

A company has purchased a tract of land and expects to build a production plant on the land in approximately 5 years. During the 5 years before construction, the land will be idle. Under IFRS, the land should be reported as: a. land expense. b. property, plant, and equipment. c. an intangible asset. d. a long-term investment.

d

Accounts that normally have debit balances are: a. assets, expenses, and revenues. b. assets, expenses, and equity. c. assets, liabilities, and dividends. d. assets, dividends, and expenses.

d

Adjusting entries are made to ensure that: a. expenses are recognized in the period in which they are incurred. b. revenues are recorded in the period in which services are performed. c. balance sheet and income statement accounts have correct balances at the end of an accounting period. d. all of the above.

d

Ethics are the standards of conduct by which one's actions are judged as: a. right or wrong. b. honest or dishonest. c. fair or not fair. d. all of these options.

d

Net income is shown on a worksheet in the: a. income statement debit column only. b. balance sheet debit column only. c. income statement credit column and balance sheet debit column. d. income statement debit column and balance sheet credit column.

d

Net income will result during a time period when: a. assets exceed liabilities. b. assets exceed revenues. c. expenses exceed revenues. d. revenues exceed expenses.

d

One of the following statements about the accrual basis of accounting is false? That statement is: a. Events that change a company's financial statements are recorded in the periods in which the events occur. b. Revenue is recognized in the period in which the performance obligation is satisfied. c. The accrual basis of accounting is in accordance with generally accepted accounting principles. d. Revenue is recorded only when cash is received, and expenses are recorded only when cash is paid.

d

Posting: a. normally occurs before journalizing. b. transfers ledger transaction data to the journal. c. is an optional step in the recording process. d. transfers journal entries to ledger accounts.

d

Which of the following is not a reason why a single set of high-quality international accounting standards would be beneficial? a. Mergers and acquisition activity. b. Financial markets. c. Multinational corporations. d. GAAP is widely considered to be a superior reporting system.

d

Which of the following statements is false? a. IFRS employs the periodicity assumption. b. IFRS employs accrual accounting. c. IFRS requires that revenues and costs must be capable of being measured reliably. d. IFRS uses the cash basis of accounting

d