Accounting Unit Two Exam Review

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

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

Joe Blake is the president and primary stockholder of Blake Enterprises. He keeps his personal income and his business income in the same checking account. Which assumption is he violating?

• business entity

• going concern

• monetary unit

• time period

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

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

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 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

Amy is just forming her private accounting practice. She would like to join a professional organization that will help her network with other CPAs and provide guidance on developing her firm. Which organization would Amy want to join?

• AICPA

• FASB

• GAAP

• SEC

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

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