Accounting Principles MCQs
Accounting Principles MCQs
These Accounting Principles multiple-choice questions and their answers will help you strengthen your grip on the subject of Accounting Principles. You can prepare for an upcoming exam or job interview with these 70+ Accounting Principles MCQs.
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A. Quality of Financial Position
B. Profit Maximization
C. Quality of Earnings
D. Conceptual Framework
A. Quality of Financial Position
B. Quality of Earnings
C. Least and Latest Rule
D. Accurate Presentation
A. Conservatism
B. Income Smoothing
C. Profit Maximization
D. Tax Minimization
A. Only the CEO now has the authority to sign the company tax returns
B. Any employee can now sign a tax return
C. Only the firm's CPA can sign the tax returns
D. Only the person who has prepared the return can sign it<br>
What is the phrase with no agreement on meaning which implies to most analysts that earnings quality increase with the likelihood of recurrence?
A. Quality of financial position
B. Quality of earnings
C. Conservatism objective
D. None of the above
What is form 8-K?
A. Monthly filing with the SEC reporting director salaries
B. As needed filing to disclose any significant issues or changes
C. Quarterly financial reports filed with the SEC
D. Annual financial reports filed with the SEC
Who can review the filings made by public companies with the SEC?
A. Only company executives
B. Anyone using the EDGAR system
C. Only law enforcement officials
D. Only the staff of the SEC and the company executives
What change was made to the internal controls of the companies by the SOX?
A. All company processes and related internal controls now need to be documented and then tested by an outside auditing firm
B. Companies no longer have to document their internal controls since the auditors do the job
C. Internal controls can be more lax than before
D. Companies have to provide for internal controls only to satisfy the auditors
What is the accounting objective which best relates to the LIFO method?
A. Income Smoothing
B. Accurate Presentation
C. Conservatism
D. None of the above
What is the acronym for the agency authorized by the U.S. Congress to regulate, among other things, the financial reporting practices of most public corporations?
A. SEC
B. IASC
C. FASB
D. GAAP
What two filings are required when a company wishes to list its stock?
A. Forms 10K and 10Q
B. Forms S-X and S-K
C. Forms 8K and 10Q
D. Forms S-X and X-S
Which of the following accounts may appear on a company's balance sheet when the incomes for financial and tax reporting are different?
A. Income tax expenses
B. Deferred income tax liability
C. Sales tax expenses
D. All of the above
What are the 3 types of Health Care Organizations for accounting purposes?
A. Incorporated, Limited Liability, Sole Proprietor
B. Asset based, Liability based, Expense based
C. Investor-owned, Non-Profit, Governmental
D. Private, Public, LLC
What entry would a donor make when giving a cash donation to a charity, where the donor retains the right to revoke the contribution?
A. Dr: Cash, Cr: Refundable Advance to Charity
B. Dr: Refundable Advance to Charity, Cr: Cash
C. Dr: Expense, Cr: Cash
D. Dr: Revenue, Cr: Expense
Which of the following is a valid criticism of the SOX?
A. It has made regulations more strict
B. It has made foreign companies reluctant to register on US stock exchanges due to the burden of SOX reporting
C. It allows for looser corporate standards
D. It makes a few people accountable for the misdeeds of a corporation
When is revenue normally recognized for financial reporting on accrual basis?
A. At the point of sale
B. While cash is being collected
C. After all cash has been collected
D. At the end of each year
What is the reporting objective that calls for the anticipation of all losses incurred but defers the recognition of gains or profits until they are realized in arm's length transactions?
A. Conservatism
B. Materialism
C. Matching
D. Smoothing
Companies of what size have been impacted the most by the SOX from a cost perspective?
A. Mid-sized companies feel the impact the most
B. There is no correlation between company size and the cost of implementing the provisions of the Act
C. The larger companies as the larger the company, the more it has to pay to implement the provisions of the Act
D. The smaller companies as the cost of implementing the provisions of the Act does not decrease proportionally with the size of the company
How are third party adjustments to patient bills reflected in the financial statements?
A. As an addition to revenue
B. As a deduction from revenue
C. As a liability
D. As an asset
What is the accounting objective which best relates to the percentage of completion method?
A. Conservatism
B. Accurate Presentation
C. Tax Minimization
D. Income Smoothing
What is the purpose of a Registration Statement?
A. To offer securities to the public
B. To disclose the operations during the first year
C. To provide information to the public about a company before it is traded publicly
D. Financial records for the company from inception to date
What is the acronym for an organization that promotes the international harmonization of accounting standards?
A. SEC
B. IASC
C. FASB
D. None of the above
What is the accounting objective which best relates to the FIFO method?
A. Tax Minimization
B. Income Smoothing
C. Profit Maximization
D. Accurate Reporting
For which of the following would the use of the straight-line method of amortization be acceptable?
A. Building
B. Patent
C. Goodwill
D. All of the above
What is the acronym for the independent board responsible, since 1973, for establishing generally accepted accounting principles?
A. GAAP
B. IASC
C. SEC
D. FASB
What is the database created by the SEC for companies to file electronically?
A. PCAOB
B. EDGAR
C. SEC
D. IRS
What is form 10-Q?
A. Monthly filing with the SEC reporting director salaries
B. As needed filing to disclose any significant issues or changes
C. Quarterly financial reports filed with the SEC
D. Annual financial reports filed with the SEC
What is the accounting objective which best relates to the MACRS method?
A. Income Smoothing
B. Profit Maximization
C. Tax Minimization
D. None of the above
What is the accounting objective which best relates to the Lower of Cost or Market Price method?
A. Accurate Presentation
B. Tax Minimization
C. Profit Maximization
D. Conservatism
What is the accounting objective which best relates to the capitalization of prepaid advertising costs?
A. Profit Maximization
B. Accurate Presentation
C. Tax minimization
D. None of the above
What new board was created as part of the Sarbanes Oxley Act?
A. SEC – Securities and Exchange Commission
B. IRS – Internal Revenue Service
C. PCAOB – Public Company Accounting Oversight Board
D. GAAP – Generally Accepted Accounting Principles
What value should a contribution be accounted for at?
A. Historical value
B. Fair value
C. Market value
D. Value determined by auditors
What is Form 10-K?
A. Monthly filing with the SEC reporting salaries to the directors
B. As needed filing to disclose any significant issues or changes
C. Quarterly financial reports filed with the SEC
D. Annual financial reports filed with the SEC
What statements are required of a Non-Profit organization?
A. statement of financial position, statement of cash flows, and statement of activity and changes in net assets
B. Bank Statements
C. Cash Flows and Income Statement
D. Changes in retained earnings, statement of cash flows, income statement
Which of the following methods is normally considered to be acceptable for financial reporting?
A. MACRS
B. Lower of cost or market price for inventories
C. Direct write off of uncollectible accounts
D. Capitalization of R&D Costs
What is the accounting objective which best relates to the disclosing of the cost of employee stock options (not expensing)?
A. Conservatism
B. Profit Maximization
C. Income Smoothing
D. Tax Minimization
What is the acronym for the organization that promotes international harmonization of accounting standards?
A. IASB
B. FASB
C. SEC
D. IRS
Which doctrine lays down that a firm should account for a given set of operations so as to make reported net income as large as possible?
A. Least and latest rule
B. Profit maximization
C. Income smoothing
D. None of the above
What is the accounting objective which best relates to the straight line method?
A. Profit Maximization
B. Conservatism
C. Tax Minimization
D. None of the above
What is the acronym for an independent board responsible, since 1973, for establishing generally accepted accounting principles?
A. SEC
B. IASC
C. FASB
D. None of the above
What is the accounting objective which best relates to the percentage of sales method for uncollectible accounts?
A. Accurate Presentation
B. Tax Minimization
C. Profit Maximization
D. Conservatism
What was the purpose of the Sarbanes Oxley act, in general?
A. To allow for caps on management salaries
B. To allow for price setting on the stock market
C. To regulate employee pension funds
D. To better regulate public and private companies in the wake of recent accounting scandals
What is the acronym for the agency authorized by the U.S. Congress to regulate the financial reporting practices of most public corporations?
A. SEC
B. IASC
C. FASB
D. None of the above
Which of the following statements would be incorrect in comparing the financial statements of two companies, XYZ and ABC which are identical in all respects except that XYZ uses FIFO and ABC uses LIFO in costing its inventories? Prices have been rising steadily over the last several years.
A. The inventory of XYZ would be higher than the inventory of ABC
B. The retained earnings of XYZ would be higher than the retained earnings of ABC
C. The net income in the current year of XYZ would be higher than the net income of ABC
D. The tax liability of XYZ would be less than the tax liability of ABC
What is the qualitative accounting objective suggesting that information reported in a financial statement should correspond as precisely as possible to the economic effects underlying transactions and events?
A. Conceptual Framework
B. Quality of Financial Position
C. Accurate Presentation
D. Least and Latest Rule
What is the effect of the SOX on public companies?
A. It has made regulations more strict
B. It has added accountability to the upper management
C. It has forced companies to look at their internal controls
D. All of the above
What is 'paying the least amount of taxes as late as possible within the law to minimize the present value of tax payments for a given set of operations' a description of?
A. Profit Maximization
B. Least and Latest Rule
C. Conservatism
D. Income Smoothing
How is a donated asset accounted by a non-profit organization based on its fair market value?
A. Dr: Asstes, Cr: Revenue
B. Dr: Revenue, Cr: Liability
C. Dr: Expenses, Cr: Assets
D. Dr: Revenue, Cr: Expenses
In which year was the Sarbanes Oxley Act passed?
A. 2008
B. 1945
C. 2002
D. 1845
A. Merely disclose the cost of those grants
B. Charge that cost as expense for the period during which it makes the grant
C. Choose either of the options a and b
D. Neither a nor b
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