Accounting Principles Test

Accounting Principles Test

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

What value should a contribution be accounted for at?

a. Historical value

b. Fair value

c. Market value

d. Value determined by auditors

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

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

What was the purpose of the Sarbanes Oxiey 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

What new board was created as part of the Sarbanes Oxiey 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

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

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

a. IASB

b. FASB

c. SEC

d. IRS

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

What is form 10-Q?

a. Monthly filmg 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

What two filings are required when a company wishes to list its stock?

a. Forms 10Kand 10Q

b. Forms S-X and S-K

c. Forms 8K and 10Q

d. Forms S-X and X-S

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

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

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 taxre turns

d. Only the person who has prepared the return can sign it

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

Which of the following courses of action should a firm take in order to minimize the present value of income tax payments?

a. Use the LIFO inventory method instead of FIFO duratmg periods of rising prices

b. Depreciate fixed assets on the straight-line method rather than the MACRS method

c. Capitalize exploration costs instead of expensing them

d. All of the above

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

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

What is the phrase which, though there is no agreement on its meaning, implies to most analysts that the quality of earnings improves with the likelihood of recurrence?

a. Quality of Financial Position

b. Quality of Earnings

c. Least and Latest Rule

d. Accurate Presentation

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

What is the doctrine that the firm should account for a given set of operations so as to make reported net income as large as possible known as?

a. Conservatism

b. Quality of Earnings

c. Profit Maximization

d. Matching

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

What is the database created by the SEC for companies to file electronically?

a. PCAOB

b. EDGAR

c. SEC

d. IRS

What entry would a donor make when giving a cash donation to a charity, where the donor retains the right to revoke the contribution?

a. Dr Cash, Cr Refundable Advance to Charity

b. Dr Refundable Advance to Charity, Cr Cash

c. Dr Expense, Cr Cash

d. Dr Revenue, Cr Expense

Which of the following statements would be incorrect in comparing the financial statements of two companies, XYZ and ABC which are identical in all respects except that XYZ uses FIFO and ABC uses LIFO in costing its inventories? Prices have been rising steadily over the last several years

a. The inventory of XYZ would be higher than the inventory of ABC

b. The retained earnings of XYZ would be higher than the retained earnings of ABC

c. The net income in the current year of XYZ would be higher than the net income of ABC

d. The tax liability of XYZ would be less than the tax liability of ABC

How is a donated asset accounted by a non-profit organization based on its fair market value?

a. Dr Asstes.Cr Revenue

b. Dr Revenue, Cr Liability

c. Dr Expenses, Cr Assets

d. Dr Revenue, Cr Expenses

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

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

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

Which of the following is a method of timing business transactions or choosing accounting principles so that the firm reports smaller variations in income from year to year than it would otherwise?

a. Conservatism

b. Income Smoothing

c. Profit Maximization

d. Least and Latest Rule

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

a. Income Smoothing

b. Accurate Presentation

c. Conservatism

d. None of the above

When revenue is normally recognized for financial reporting on accrual basis?

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

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