CHAPTER 1—INTRODUCTION TO FINANCIAL REPORTING
MULTIPLE CHOICE
1. Charging off equipment that cost less than $20 would be an example of the application of:
| a. | going concern. |
| b. | cost. |
| c. | matching. |
| d. | materiality. |
| e. | realization. |
ANS: D PTS: 1 DIF: Difficulty: Easy
NAT: BUSPROG: Communication
STA: AICPA: FN: Measurement | ACBSP: GAAP | IMA: Financial Statement Analysis
TOP: Traditional Assumptions of the Accounting Model KEY: Bloom's: Knowledge
NOT: Time: 1 min.
2. The going concern assumption:
| a. | is applicable to all financial statements. |
| b. | primarily involves periodic income measurement. |
| c. | allows for the statements to be prepared under generally accepted accounting principles. |
| d. | requires that accounting procedures be the same from period to period. |
| e. | none of the answers are correct. |
ANS: C PTS: 1 DIF: Difficulty: Moderate
NAT: BUSPROG: Communication
STA: AICPA: FN: Measurement | ACBSP: GAAP | IMA: Financial Statement Analysis
TOP: Traditional Assumptions of the Accounting Model KEY: Bloom's: Knowledge
NOT: Time: 1 min.
3. Understating assets and revenues is justified based on:
| a. | realization assumption. |
| b. | matching. |
| c. | consistency. |
| d. | realization. |
| e. | None of the answers are correct. |
ANS: E PTS: 1 DIF: Difficulty: Easy