Accounting 2.01 & 2.02

John has been 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?

• AICPA

• GAAP

• FASB

• SEC

Hardwick Corporation is based in the United States. When preparing its financial statements, the corporation failed to include a large credit sale to a customer in the general ledger, which was made on December 31st. What concept is Hardwick Corporation violating?

• measurement concept

• materiality concept

• reality concept

• recognition concept

Harley's Hog BBQ owns and operates several barbecue restaurants. In 20XX, 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 because it was so close to maturity. Which principle did Harley's Hog BBQ violate?

• cost principle

• full disclosure principle

• revenue recognition principle

• matching principle

During the preparation of the Furniture Company's financial statements, one of the accountants has to decide between two alternative methods of valuing Uncollectible Accounts. He decides to choose the method that reports the highest amount. Which constraint did the accountant follow?

• cost effectiveness

• conservatism

• materiality

• recognition

Todd Jones, CPA, is preparing the financial statements of XYZ Corporation. 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?

• comparability

• consistency

• relevance

• reliability

John, a certified public accountant, recently learned that a new set of principle-based standards, interpretations, and frameworks have been adopted by the United States and other countries. To better prepare himself, John should learn about what?

• FASB

• GAAP

• GASB

• IFRS

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?

• Cost Effectiveness Constraint

• Conservatism Constraint

• Materiality Constraint

• Recognition Constraint

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

• business entity

• going concern

• monetary unit

• time period

Lisa is applying for a position in a small insurance agency. The company wants to hire an individual that can convert its manual accounting system to a computerized system. She listed on her application that she has an accounting degree as well as an emphasis in computerized systems. These qualifications represent which type of skills?

• basic skills

• workplace skills

• foundation skills

• communication skills

Joseph Miller, CPA, is preparing an audit for LRK Merchandising. During the audit year, the finance officer for LRK was terminated and charged with embezzlement. Because the court has yet to hear the case and the finance officer is a close friend of Miller, he chooses to exclude information regarding the case in the audit report. Which specific rule of conduct does Miller violate?

• Confidential Client Information

• Contingent Fees

• Dependent

• Integrity and Objectivity