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 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
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
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