Comparability is when statements can be compared in a single company through several periods.
FALSE
When a discontinued segment hasn't sold by year-end what happens
a. Don't record operating loss of the discontinued segment
b. Record the gain/loss of disposing the segment
c. Check for an impairment loss
d. Check for an impairment gain
C
Which of the following account balances is subtracted from Retained Earnings?
a. Net Income
b. Dividends
c. Common Stock
d. Bonds Payable
B
Prior period adjustments/changes in accounting principle are added to ending retained earnings.
FALSE
Which of the following includes gains/losses that bypass Net Income?
a. Comprehensive Income
b. Net Income
c. Other Comprehensive Income
d. Owner's Equity
C
Held-to-maturity investments can be both debt and equity securities.
FALSE
Income Summary (before closing it out) gives you your Net Income/Loss for the year.
TRUE
Which of the following is an example of a nominal account?
a. Bad debt expense
b. Accounts Receivable
c. Retained Earnings
d. Common Stock
A
Allowance for bad debt is an example of an adjunct account.
FALSE
Recording an asset at fair value is a part of this principle.
a. Revenue recognition principle
b. Expense recognition principle
c. Measurement principle
d. Full disclosure principle
C
Changes in estimates are adjusted retroactively.
FALSE
The journal entry to close out a construction contract is to Debit Billing and Credit CIP.
TRUE
Discontinued Operations are always recorded net of tax.
TRUE
The Construction in Process account consists of total cost minus gross profit.
FALSE
GAAP stands for:
a. Generally Audited Accounting Principles
b. Great Accounting Accepted Principle
c. Generally Accepted Accounting Principles
d. General Awesome Accounting Principles
C
Accumulated depreciation is an example of a contra-account.
TRUE
A note payable can be part of both short and long-term liabilities.
TRUE
The is how FASB currently sets new standards.
a. Due Process
b. EITF
c. Codification
d. Delegate to the SEC
A
Activities of the business are separate from the activities of the owner.
a. Monetary unit of assumption
b. Going concern assumption
c. Faithful representation
d. Economic entity assumption
D
Interest expense is an example of:
a. Prepaid Expense
b. Accrued Expense
c. Accrued Revenue
d. Unearned Revenue
B
The creation of a contract requires a journal entry.
FALSE
Prepaid expenses expire with the passage of time or use.
TRUE
Which method is GAAP preferred when recognizing revenue over the course of a long term contract?
a. Completed contract method
b. Recognize when cash is received
c. Revenue recognition principle
d. Percentage of completion method
D
Which of these is not an example of unearned revenue?
a. Rent
b. Depreciation
c. Magazine subscriptions
d. Airline tickets
B
There can be more than one performance obligation in a contract.
TRUE
This method of variable consideration is often used when there are only two possible outcomes.
a. 50% rule
b. Most Likely Amount
c. Expected Value
d. Probability Rule
B
Revenue is recognized when performance obligation is satisfied.
TRUE
Available-for-sale investment with unrealized gains/losses affect only OCI.
TRUE
Variable consideration is when the price of a good or service is contingent on future events.
TRUE
A correction or error is retroactively adjusted in all comparable financial statements.
TRUE
The Divided account balance is closed into Income Summary.
FALSE
Reversing entries are made at the end of the year.
FALSE
Which of the following is NOT a way to manage earnings for the year?
a. Changing bad debt estimates
b. Reducing R&D expenses
c. Not recording an expense already accrued
d. Revising the estimate useful life of equipment
C
Consolidated statements are requirement when a company has non-controlling interest in another.
FALSE
Recording depreciation is part of the Revenue Recognition Principle.
FALSE
Trading investments are reported at historical cost.
FALSE
Assets are reported based on liquidity.
TRUE
Which body is responsible for enforcing GAAP?
a. FASB
b. SEC
B
Cash-Basis of accounting is compliant with GAAP.
FALSE
Deferrals mean cash comes first.
TRUE
Unearned revenue is an asset account.
FALSE
Construction in Process and Billings on Contract are adjunct accounts.
FALSE
Unusual or infrequent losses are recorded below the line.
FALSE
During a long term construction contract, a check for profitability should be made every year.
TRUE
Comprehensive Income consists of both Net Income and Other Comprehensive Income.
TRUE
An unsold discontinued segments book value is less than fair value. You record the gain.
Fals