Exam_1_Intermediate_1_Fall_2008

Exam_1_Intermediate_1_Fall_2008 - INTERMEDATE ACCOUNTING...

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INTERMEDATE ACCOUNTING AEM3360 MID TERM 1, FALL 2008 KEY ON PAGE 10 1. Accrual accounting is used because A) cash flows are considered less important. B) it provides a better indication of ability to generate cash flows than the cash basis. C) it recognizes revenues when cash is received and expenses when cash is paid. D) none of the above. 2. Generally accepted accounting principles A) include detailed practices and procedures as well as broad guidelines of general application. B) are influenced by pronouncements of the SEC and IRS. C) change over time as the nature of the business environment changes. D) all of these. 3. The most significant current source of generally accepted accounting principles is the A) AICPA. B) SEC. C) APB. D) FASB. 4. The purpose of the International Accounting Standards Board is to A) issue enforceable standards which regulate the financial accounting and reporting of multinational corporations. B) develop a uniform currency in which the financial transactions of companies through-out the world would be measured. C) promote uniform accounting standards among countries of the world. D) arbitrate accounting disputes between auditors and international companies. 5. The quality of information that gives assurance that it is reasonably free of error and bias and is a faithful representation is A) relevance. B) reliability. C) verifiability. D) neutrality. 6. According to Statement of Financial Accounting Concepts No. 2, verifiability is an ingredient of the primary quality of A) A B) B C) C D) D Page 1
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equitydescribe amounts of resources and claims to resources atduring a A) A B) B C) C D) D 8. Proponents of historical cost ordinarily maintain that in comparison with all other valuation alternatives for general purpose financial reporting, statements prepared using historical costs are more A) reliable. B) relevant. C) indicative of the entity's purchasing power. D) conservative. 9. Generally, revenue from sales should be recognized at a point when A) management decides it is appropriate to do so. B) the product is available for sale to the ultimate consumer. C) the entire amount receivable has been collected from the customer and there remains no further warranty liability. D) none of these. 10. Which of the following is not a time when revenue may be recognized? A) At time of sale B) At receipt of cash C) During production D) All of these are possible times of revenue recognition. 11. Debit always means A) right side of an account. B) increase. C) decrease. D) none of these. 12. When a corporation pays a note payable and interest, A) the account notes payable will be increased. B)
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Exam_1_Intermediate_1_Fall_2008 - INTERMEDATE ACCOUNTING...

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