1. What is the accounting objective which best relates to the capitalization of prepaid advertising costs?
- Profile Maximization
- Accurate Presentation
- Tax minimization
- None of the above
2. What is the accounting objective which best relates to the expensing the cost of employee stock options?
- Accurate Presentation
- Income Smoothing
- Conservatism
- Profit Maximization
3. What is the phrase which, though there is no agreement on its meaning, implies to most analysts that the quality of earnings improves with the likelihood of recurrence?
- Quality of Financial Position
- Quality of Earnings
- Least and Latest Rule
- Accurate Presentation
4. For which of the following would the use of the straight-line method of amortization be acceptable?
- Building
- Patent
- Goodwill
- All of the above
5. What entry would a donor make when giving a cash donation to a charity?
- Dr: Revenue, Cr: Cash
- Dr: Expense – Cash, Cr: Cash
- Dr: Liability, Cr: Cash
- Dr: Expense – Contributions, Cr: Cash
6. 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?
- Profit Maximization
- Least and latest Rule
- Conservatism
- Income Smoothing
7. What is the accounting objective which best relates to the expensing of R&D costs?
- Income Smoothing
- Accurate Reporting
- Conservatism
- Profit Maximization
8. What is the accounting objective which best relates to the FIFO method?
- Tax Minimization
- Income Smoothing
- Profit Maximization
- Accurate Reporting
9. Which FASB sets the requirements for accounting for Non-Profit Organizations?
- FASB SFAS 999
- FASB SFAS 100
- FASB SFAS 99
- FASB SFAS 117
10. Which of the following must generally be used for financial reporting if it is used for income tax reporting?
- FIFO
- LIFO
- NIFO
- Installment sales method
11. What are forms 10K and 10Q referred to as?
- Periodic Filings
- Financial Statements
- Information Returns
- Tax Returns
12. In which year was the Sarbanes Oxley Act Passed?
- 2008
- 1945
- 2002
- 1845
13. What entry would a donor make when giving a cash donation to a charity, where the donor retains the right to revoke the contribution?
- Dr: Cash, Cr: Refundable Advance to Charity
- Dr: Refundable Advance to Charity, Cr: Cash
- Dr: Expense, Cr: Cash
- Dr: Revenue, Cr: Expense
14. What is the accounting objective which best relates to the MACRS Method?
- Income Smoothing
- Profile Maximization
- Tax Minimization
- None of the above
15. How are third party adjustments to patient bills reflected in the financial statement?
- As an addition to revenue
- As a dedication from revenue
- As a liability
- As an asset
16. What change was made to the internal controls of the companies by the SOX?
- All company processes and related internal controls now need to be documented and then tested by an outside auditing firm
- Companies no longer have to document their internal controls since the auditors do the job
- Internal controls can be more lax than before
- Companies have to provide for internal controls only satisfy the auditors
17. How should a firm compensating its employees by granting them the option to purchase its shares report it?
- Merely disclose the cost of those grants
- Charge that cost as expense for the period during which it makes the grant
- Choose either of the options a and b
- Neither a nor b
18. What value should a contribution be accounted for at?
- Historical value
- Fair value
- Market value
- Value determined by auditors
19. What change was made in regarding the penalization of the whistleblowers (people who alert the authorities about the illegal activities in a corporation) by the companies?
- They are now themselves subject to fraud charges for uncovering the crimes
- They are put under witness protection
- They are offered a transfer to a new department
- They are now protected against retaliation by the company in order to encourage employees to bring the wrong doings of the companies to light
20. What is the accounting objective which best relates to the disclosing of the cost of employee stock options (no expensing)?
- Conservatism
- Profit Maximization
- Income smoothing
- Tax Minimization
21. What two filing are required when a company wishes to list its stock?
- Forms 10K to 10Q
- Forms S-X and S-K
- Forms 8K and 10Q
- Forms S-X and X-S
22. What is the database created by the SEC for companies to file electronically?
- PCAOB
- EDGAR
- SEC
- IRS
23. Which sentence concerning ABC’s financial statements would be correct? ABC CO. has decided to use the straight line depreciation method in its financial statements and the MACRS method in its tax return.
- The net cash flow from operations will be less than what it would have been if the straight-line method had been used for tax purposes as well as financial statement purposes.
- The income tax expenses presented in the income statement in the early years of the useful lives of the assists would be less than the tax payments to the Federal Government
- Deferred income tax liability will be shown as a liability one the balance sheet
- All of the above
24. What statements are required of a Non-Profit organization?
- Statement of financial position, statement of cash flows, and statement of activity and changes in net assists.
- Bank Statement
- Cash Flows and Income statement
- Changes in retained earnings, statement of cash flows, income statement
25. What change was made by the Act regarding the authority competent to sign the company tax returns?
- Only the CEO now has the authority to sign the company tax return
- Any employee can now sign a tax return
- Only the firm’s CPA can sign the tax return
- Only the person who was has prepared the return can sign it
26. 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
- Conservatism
- Materialism
- Matching
- Smoothing
27. Which of the following is method of timing business transactions or choosing accounting principle so that firm report smaller variations in income from year to year than it would otherwise?
- Conservatism
- Income smoothing
- Profit Maximization
- Least and latest rule
28. Which of the following is true of the Sarbanes Oxley Act?
- It has bolstered investor confidence
- It has increased all stock price
- It has increased the number of foreign corporations registering in the US
- It has created more work for corporate accounting department
29. What is the accounting objective which best relates to the completed contract method?
- Income Smoothing
- Profit Maximization
- Tax Minimization
- None of the above
30. What is the accounting objective which best relates to the Lower of Cost Market price method?
- Accurate Presentation
- Tax Minimization
- Profit Maximization
- Conservatism
31. For which of the following accounts would the use of “the lower of cost or market price” principle be acceptable?
- Inventory
- Land
- Prepaid rent
- All of the above
32. What is the effect of the SOX on public companies?
- It has made regulations more strict
- It has added accountability to the upper management
- It has forced companies to look at their internal controls
- All of the above
33. What is form 10 Q?
- Monthly filing with the SEC reporting director salaries
- As needed filing to disclose any significant issue or changes
- Quarterly financial reports filed with the SEC
- Annual financial reports filed with the SEC
34. What is the acronym for an independent board responsible, since 1973, for establishing generally accepted accounting principles?
- SEC
- IASC
- FASB
- None of the above
35. What is the qualitative accounting objective suggesting that information in a financial statement should correspond as precisely as possible to the economic effects underlying transactions and events?
- Conceptual Framework
- Quality Financial position
- Accurate Presentation
- Least and latest rule
36. What is the acronym for the agency authorized by the U.S Congress to regulate the financial reporting practices of most public corporations?
- SEC
- IASC
- FASB
- None of the above
37. What new board was created as part of the Sarbanes Oxley Act?
- SEC – Securities and Exchange Commission
- IRS – Internal Revenue Service
- PCAOB – Public Company Accounting Oversight Board
- GAAP – Generally Accepted Accounting Principles
38. Which of the financial accounting objectives listed below would seem to be closet of the objective of tax reporting?
- Conservatism
- Fair Presentation
- Accuracy
- Profit Maximization
39. What is the accounting objective which best relates to the weighted average inventory method?
- Tax Minimization
- Income Smoothing
- Profit Maximization
- None of the above
40. Which of the following methods is normally considered to be acceptable for financial reporting?
- MACRS
- Lower of cost of market price for inventories
- Direct write off of uncollectible accounts
- Capitalization of R&D Costs
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