Accounting exam 2

What are generally accepted accounting principles

• Usually established by the Internal Revenue Service

• A set of accounting standards that have authoritative support

• The guidelines used to resolve ethical dilemmas

• Fundamental truths that can be derived from the laws of nature

What organization issues International Financial Reporting Standards

• International Accounting Standards Board

• IFRS

• Financial Accounting Standards Board

• International Auditing Standards Committee

What is the primary accounting standard-setting body in the US

• Securities and Exchange Commission

• Financial Accounting Standards Board

• IFRS

• Public Company Accounting Oversight Board (PCAOB)

What are the accounting rules that have substantial authoritative support and are recognized as a general guide for financial reporting purposes in the US

• Generally accepted accounting principles

• Generally accepted auditing principles

• Generally accepted principles

• Generally accepted accounting standards

Which of the following are constraints that allow a company to modify generally accepted principles without jeopardizing the usefulness of the financial statements

• Consistency and comparability

• Relevance and faithful representation

• Timeliness and neutrality

• Cost constraint

An item it _______ if it is likely to influence the decision of an investor or creditor

• Faithfully represented

• Consistent

• Comparable

• Material

What is the primary criterion by which accounting information can be judged

• Usefulness for decision making

• Comparability

• Predictive value

• Consistency

The effect on the basic accounting equation of performing services for cash is to

• increase assets and decrease stockholders equity

• increase assets and increase stockholders equity

• increase liabilities and increase stockholders equity

• increase assets and increase liabilities

Genesis Company buys equipment for $900 on account. This transaction will immediately affect the

• Income statement only

• Balance sheet only

• Income statement and retained earnings statement only

• Income statement, retained earnings statement, and balance sheet

Which of the following events is not recorded in the accounting records

• An employee is terminated

• The owner withdraws cash for personal use

• equipment is purchased on account

• a cash investment is made into the business