1.01 Test Accounting Principles

Joe Blake is the president and primary stockholder of Blake He just found out that his company may file bankruptcy and go out of business. When preparing the company's financial statements, Joe withholds this information from the accountants. Which of the following assumptions is he violating?

• Going Concern Assumption

• Monetary Unit Assumption

• Business Entity Assumption

• Business Entity Assumption

John has a Certified Public Accountant for 15 years. While auditing a publicly traded company, John finds fraudulent information that is intended for the company's shareholders. Which governing body should John advise of the finding?

• FASB

• AICPA

• SEC

• GAAP

John has been a Certified Public Accountant for 15 Recently, he has learned that a new set of principles based standards, interpretations, and framework has been adopted by the US and other Global Countries. To better prepare himself, John should learn about the?

• IFRS

• FASB

• GASB

• GAAP

Stan Stanley, a stockholder of Hubble Corporation, has just received a set of financials. Although he took Accounting I in high school, he really did not pay much attention to his studies. While looking at these financials, he sees the words Net Income, Dividends Paid, and Stocks Issued on a sheet. What financial statement is Stan viewing?

• Statement of Cash Flow

• Statement of Stockholders Equity

• Income Statement

• Balance Sheet

Peter is a shareholder of Peppers Corporation. While preparing the year-end financial statements, Peppers Corporation failed to disclose a substantial, pending lawsuit against the corporation. Which quality of accounting information was violated?

• Reliability

• Comparability

• Consistency

• Relevance

Harley's Hoog BBQ owns and operates several Barbeque In 2004, Harley, the owner, took out a loan for his business in the amount of $100,000. The loan will be completely paid off within 6 months. When preparing the financial statements of the business, Harley opted not to list the loan, since it was so close to maturity. Which principle did Harley's Hog violate?

• Full Disclosure Principle

• Matching Principle

• Revenue Recognition Principle

• Cost Principle

The Furniture Company prepares its financial statements four times per year. Which assumption is the Furniture Company following?

• Time Period Assumption

• Business Entity Assumption

• Going Concern Assumption

• Monetary Unit Assumption

When the accountant has to choose between two acceptable alternatives, the accountant should select the alternative that will report less profit, less asset amount, or a greater liability amount. This is based upon which principle/guideline?

• Materiality Constraint

• Cost Effectiveness Constraint

• Recognition Constraint

• Conservatism Constraint

Susan Sorry has just started her company. She sells sea shells by the sea shore. Since this is her first year of operations, she wants to show as large of a profit as she can to impress her stockholders. When she is preparing her year-end financials, Susan decides to wait and list some expenses of her business until next year, when her profit will be higher. Which principle keeps Susan from inadequately accounting for these costs?

• Matching Principle

• Revenue Recognition Principle

• Cost Principle

• Full Disclosure Principle

Todd Jones, CPA, is preparing the financial statements of XYZ Todd makes sure that information capable of making a difference in a user's decision making is included in the financial statements. Which quality of accounting information has been followed?

• Reliability

• Consistency

• Comparability

• Relevance