Accounting 1 - 2.01

Lucy has been a Certified Public Accountant for 5 years. One of Lucy’s clients is a public company whose stock is offered on the New York Stock Exchange. During her audit of the company, Lucy discovered that several of the assets on the financial statements were deliberately misstated. Which governing body should Lucy advise of the finding?

• FASB

• GAAP

• AICPA

• SEC

Mary Little, CPA, is preparing the financial statements of ABC Corporation. Mary 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?

• Relevance

• Reliability

• Comparability

• Consistency

During the preparation of the Toys4U Company’s financial statement, one of the accountants has to decide between two alternative methods of valuing Inventory. He decides to choose the method that reports the highest amount. Which constraint did the accountant follow?

• Cost Effectiveness Constraint

• Materiality Constraint

• Conservatism Constraint

• Recognition Constraint

Thomason Corporation is based in the United States. When preparing its financial statements, the corporation failed to include the purchase of a new tractor-trailer truck in the general ledger, which was made on December 31st. What concept is Thomason Corporation violating?

• Measurement Concept

• Recognition Concept

• Reality Concept

• Materiality Concept

Donna Jones is the president and primary stockholder of Jones Enterprises. She keeps her personal income and her business income in the same checking account. Which of the following assumptions is she violating?

• Business Entity Assumption

• Going Concern Assumption

• Monetary Unit Assumption

• Time Period Assumption

Petersmith Corporation purchased a used work van for its business for $10,000. After doing some minor body work and repainting, the owner estimated that he could sell the van for $15,000. Therefore, the owner changed the Van amount on the balance from $10,000 to $20,000. Which principle did he violate?

• Cost Principle

• Full Disclosure Principle

• Revenue Recognition Principle

• Matching Principle

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

Jerry Attric, a stockholder of XYZ Corporation, has just received a set of financials. While looking at these financials, he sees the words Assets, Liabilities, and Stockholders' Equity on a sheet. Which financial statement is Stan viewing?

• Balance Sheet

• Income Statement

• Statement of Cash Flows

• Statement of Retained Earnings