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Homework answers / question archive / Texas A&M University, -Commerce ACCT 502 Chapter1 1)GAAP is an abbreviation for: Generally authorized accounting procedures

Texas A&M University, -Commerce ACCT 502 Chapter1 1)GAAP is an abbreviation for: Generally authorized accounting procedures

Accounting

Texas A&M University, -Commerce

ACCT 502

Chapter1

1)GAAP is an abbreviation for:

Generally authorized accounting procedures.

Generally applied accounting procedures.

Generally accepted auditing practices.

Generally accepted accounting principles.

 

 

 

2.            In the Norwalk Agreement, the FASB and IASB pledged to:

Combine their organizations to form the BUSYB.

Make progress on specific MOU projects.

Achieve convergence by the year 2015.

Remove existing differences between their standards.

 

 

 

3.            Accounting standard-setting has been characterized as:

A political process.

Using the scientific method.

Pure deductive reasoning.

Pure inductive reasoning.

 

 

4.            Which of the following is not an identified valuation technique in GAAP regarding fair value measurement?

Cost approach.

Market approach.

Cost-benefit approach.

Income approach.

 

 

5.            Change in equity from nonowner sources is:

Comprehensive income.

Revenues. Expenses.

Gains and losses.

 

 

6.            The most political issue in the FASB's most recent deliberations and amendments to GAAP on business combinations was:

A.            The negative effects on subsequent earnings of amortizing goodwill if firms were required to use the purchase method of accounting for the combination.

 

B.            The negative effects on subsequent earnings of amortizing goodwill if firms were required to use the pooling method of accounting for the combination.

 

C.            The unrealistic balance sheet assets that would be created if firms were required to use the purchase method of accounting for the combination.

 

D.            The unrealistic balance sheet assets that would be created if firms were required to use the pooling method of accounting for the combination.

 

 

 

7.            The possibility that the capital markets' focus on periodic profits may tempt a company's management to bend or even break accounting rules to inflate reported net income is an example of:

An ethical dilemma.

An accounting theory issue.

A technical accounting issue.

An auditor's responsibility to inform the SEC.

 

 

8.            Elements of financial statements do not include:

Monetary unit.

Investments by owners.

Comprehensive income. Losses.

 

 

9.            The matching principle is:

A valuation method.

An expense recognition accounting principle.

 A cash basis reporting principle.

An asset classification procedure.

10.          Pronouncements issued by the Committee on Accounting Procedures:

Dealt with specific accounting and reporting problems.

Were based on exposure drafts and public comment letters.

Originated from congressional studies and SEC directives.

Were the outcome of research studies and a theoretical framework.

 

11.          When Castle Corporation pays insurance premiums, the transaction is recorded as a debit to prepaid insurance. Additional information for the year ended December 31 is as follows:

 

Prepaid insurance at January 1   $52,500

Insurance expense recognized during the year 

218,750

Prepaid insurance at December 31           61,250

 

 

 

What was the total amount of cash paid by Castle for insurance premiums during the year?

$218,750

$166,250

$210,000

$227,500

 

Expense recognized       $218,750

Add: Increase in prepaid insurance                         8,750

Cash paid for insurance $227,500

 

 

 

 

12.          A sale on account would be recorded by:

Debiting revenue.

Crediting assets.

Crediting liabilities.

Debiting assets.

 

 

13.          Mary Parker Co. invested $15,000 in ABC Corporation and received capital stock in exchange. Mary Parker Co.'s journal entry to record this transaction would include a:

Debit to investments.

Credit to retained earnings.

Credit to capital stock.

Debit to expense.

14.          An example of a contra account is:

Depreciation expense.

Accounts receivable.

Sales revenue.

Accumulated depreciation.

 

15.          Which of the following accounts has a normal credit balance?

Salary expense.

Accrued income taxes payable.

 Land.

Prepaid rent.

 

 

 

 

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