Question 1

Which of the following is not a reason international accounting standards are needed?

Accepted Answer

A)  Multinational corporations
B)  Mergers and acquisitions
C)  Information technology
D)  All of these answer choices are correct.IFRS.

Question 2

Matador Company purchases $1,300 of equipment from Danger Mouse Inc.for cash. The effect on the basic accounting equation of Matador Company is

Accepted Answer

A)  an increase in assets and liabilities.
B)  a decrease in assets and liabilities.
C)  no change in total assets.
D)  an increase in assets and a decrease in liabilities. C

Question 3

The common characteristic possessed by all assets is

Accepted Answer

A)  long life.
B)  great monetary value.
C)  tangible nature.
D)  future economic benefit.

Question 4

In order to possess future service potential, an asset must have physical substance.

Accepted Answer

A) True 
 B)False

Question 5

The cost and fair value of an asset are the same at the time of acquisition and in all subsequent periods.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is true regarding the corporate form of business organization?

Accepted Answer

A)  Corporations are the most prevalent form of business organization.
B)  Corporate businesses are generally smaller in size than partnerships and proprietor-ships.
C)  The revenues of corporations are greater than the combined revenues of partnerships and proprietorships.
D)  Corporations are separate legal entities organized exclusively under federal law. C

Question 7

Which of the following is not a reason international accounting standards are needed?

Accepted Answer

A)  Multinational corporations
B)  Financial markets
C)  Information technology
D)  All of the above are reasons international accounting standards are needed.IFRS.

Question 8

The fair value principle is applied for

Accepted Answer

A)  all assets.
B)  current assets.
C)  buildings.
D)  investment securities.

Question 9

Owners of business firms are the only people who need accounting information.

Accepted Answer

A) True 
 B)False

Question 10

The monetary unit assumption states that only transactions that can be measured in terms of money should be recorded in the accounting records.

Accepted Answer

A) True 
 B)False

Question 11

The conceptual framework that underlies IFRS

Accepted Answer

A)  is very similar to that used to develop GAAP.
B)  does not define assets or liabilities.
C)  does not define equity.
D)  does not define income or expenses.IFRS.

Question 12

The ending retained earnings balance is reported on both the retained earnings statement and the balance sheet.

Accepted Answer

A) True 
 B)False

Question 13

Keeping a systematic, chronological diary of events that are measured in dollars and cents is called

Accepted Answer

A)  communicating.
B)  identifying.
C)  processing.
D)  recording.

Question 14

Stockholders' equity is often referred to as

Accepted Answer

A)  residual equity.
B)  leftovers.
C)  spoils.
D)  second equity.

Question 15

Even though a partnership is not a separate legal entity, for accounting purposes the partnership affairs should be kept separate from the personal activities of the owners.

Accepted Answer

A) True 
 B)False

Question 16

Accountants rely on a fundamental business concept-ethical behavior-in reporting financial information.

Accepted Answer

A) True 
 B)False

Question 17

The SEC and FASB are two organizations that are primarily responsible for establishing generally accepted accounting principles.It is true that

Accepted Answer

A)  they are both governmental agencies.
B)  the SEC is a private organization of accountants.
C)  the SEC relies on FASB to develop accounting standards.
D)  the SEC and FASB rarely cooperate in developing accounting standards.

Question 18

In order to increase comparability, the FASB and IASB have made efforts to reduce the differences between U.S.GAAP and IFRS through a process known as

Accepted Answer

A)  convergence.
B)  monetary unit assumption.
C)  the cost principle.
D)  the fair value principle.

Question 19

Liabilities

Accepted Answer

A)  are future economic benefits.
B)  are existing debts and obligations.
C)  possess service potential.
D)  are things of value used by the business in its operation.

Question 20

Both internal and external transactions are recorded in accounting records.

Accepted Answer

A) True 
 B)False  True

Exam 1: Accounting in Action

Which of the following is not a reason international accounting standards are needed?

Correct AnswerverifiedShow Answer

Matador Company purchases $1,300 of equipment from Danger Mouse Inc.for cash. The effect on the basic accounting equation of Matador Company is

Correct AnswerverifiedC

The common characteristic possessed by all assets is

Correct AnswerverifiedShow Answer

In order to possess future service potential, an asset must have physical substance.

Correct AnswerverifiedShow Answer

The cost and fair value of an asset are the same at the time of acquisition and in all subsequent periods.

Correct AnswerverifiedShow Answer

Which of the following is true regarding the corporate form of business organization?

Correct AnswerverifiedC

Which of the following is not a reason international accounting standards are needed?

Correct AnswerverifiedShow Answer

The fair value principle is applied for

Correct AnswerverifiedShow Answer

Owners of business firms are the only people who need accounting information.

Correct AnswerverifiedShow Answer

The monetary unit assumption states that only transactions that can be measured in terms of money should be recorded in the accounting records.

Correct AnswerverifiedShow Answer

The conceptual framework that underlies IFRS

Correct AnswerverifiedShow Answer

The ending retained earnings balance is reported on both the retained earnings statement and the balance sheet.

Correct AnswerverifiedShow Answer

Keeping a systematic, chronological diary of events that are measured in dollars and cents is called

Correct AnswerverifiedShow Answer

Stockholders' equity is often referred to as

Correct AnswerverifiedShow Answer

Even though a partnership is not a separate legal entity, for accounting purposes the partnership affairs should be kept separate from the personal activities of the owners.

Correct AnswerverifiedShow Answer

Accountants rely on a fundamental business concept-ethical behavior-in reporting financial information.

Correct AnswerverifiedShow Answer

The SEC and FASB are two organizations that are primarily responsible for establishing generally accepted accounting principles.It is true that

Correct AnswerverifiedShow Answer

In order to increase comparability, the FASB and IASB have made efforts to reduce the differences between U.S.GAAP and IFRS through a process known as

Correct AnswerverifiedShow Answer

Liabilities

Correct AnswerverifiedShow Answer

Both internal and external transactions are recorded in accounting records.

Correct AnswerverifiedTrue

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C

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C

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True