Elance Accounting Principles Test Questions

Question: 01
Which of the following is true of the Sarbanes Oxley Act?


    a.     It has bolstered investor confidence
    b.     It has increased all stock prices
    c.     It has increased the number of foreign corporations registering in the US
    d.     It has created more work for corporate accounting departments


Question: 02
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


Question: 03
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


Question: 04
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


Question: 05
How should a firm compensating its employees by granting them the option to purchase its shares report it?


    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


Question: 06
How are gifts to a charity which are to be further passed on to a 3rd party accounted for while being held by the charity?


    a.     Dr: Expense, Cr: Revenue
    b.     Dr: Liability, Cr: Revenue
    c.     Dr: Liability, Cr: Asset
    d.     Dr: Asset, Cr: Liability


Question: 07
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


Question: 08
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?


    a.     They are now themselves subject to fraud charges for uncovering the crimes
    b.     They are put under witness protection
    c.     They are offered a transfer to a new department
    d.     They are now protected against retaliation by the company in order to encourage employees to bring the wrong doings of the companies to light


Question: 09
How is an unconditional promise to give a donation to a charity accounted for by the charity?


    a.     Not recorded at all until 100% contribution is received
    b.     Never recorded even after receipt
    c.     As revenue only when the donation is made
    d.     As revenue when the promise is made


Question: 10
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


Question: 11
Which of the financial accounting objectives listed below would seem to be closest to the objective of tax reporting?


    a.     Conservatism
    b.     Fair Presentation
    c.     Accuracy
    d.     Profit Maximization


Question: 12
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


Question: 13
What is the database created by the SEC for companies to file electronically?


    a.     PCAOB
    b.     EDGAR
    c.     SEC
    d.     IRS


Question: 14
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


Question: 15
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


Question: 16
Which of the following must generally be used for financial reporting if it is used for income tax reporting?


    a.     FIFO
    b.     LIFO
    c.     NIFO
    d.     Installment sales method


Question: 17
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


Question: 18
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


Question: 19
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


Question: 20
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


Question: 21
What are forms 10K and 10Q referred to as?


    a.     Periodic Filings
    b.     Financial Statements
    c.     Information Returns
    d.     Tax Returns


Question: 22
What is the accounting objective which best relates to the expensing the cost of employee stock options?


    a.     Accurate Presentation
    b.     Income Smoothing
    c.     Conservatism
    d.     Profit Maximization


Question: 23
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


Question: 24
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?


    a.     Quality of Financial Position
    b.     Quality of Earnings
    c.     Least and Latest Rule
    d.     Accurate Presentation


Question: 25
What factors affect the balance sheet, given the articulation of the income statement with the balance sheet and the factors that imply high or low quality of earnings?


    a.     Quality of Financial Position
    b.     Profit Maximization
    c.     Quality of Earnings
    d.     Conceptual Framework


Question: 26
What is the accounting objective which best relates to the double declining balance method?


    a.     Conservatism
    b.     Income Smoothing
    c.     Profit Maximization
    d.     Tax Minimization


Question: 27
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


Question: 28
Which of the following is not an example of the accounting practices followed by a firm having wide flexibility in the choice of alternative methods for financial reporting?


    a.     Accounting for depreciation
    b.     Accounting for investment in common stocks
    c.     Accounting for inventories
    d.     None of the above


Question: 29
What is the accounting objective which best relates to the FIFO method?


    a.     Tax Minimization
    b.     Income Smoothing
    c.     Profit Maximization
    d.     Accurate Reporting


Question: 30
What change was made by the Act regarding the authority competent to sign the company tax returns?


    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


Question: 31
Which of the following methods would be employed to help accomplish the following objective: smoothing a firm's income as a means of minimizing large fluctuations in the price of its stock.


    a.     Weighted average inventory
    b.     Percentage of completion method for long term construction contracts
    c.     Straight line amortization of patents
    d.     All of the above


Question: 32
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


Question: 33
What kind of organization issuing securities would NOT have to register them with the SEC?


    a.     A private IT firm
    b.     The government
    c.     A publicly traded book publisher
    d.     A firm with no revenue


Question: 34
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


Question: 35
What value should a contribution be accounted for at?


    a.     Historical value
    b.     Fair value
    c.     Market value
    d.     Value determined by auditors


Question: 36
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


Question: 37
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


Question: 38
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


Question: 39
Which of the following courses of action should a firm take in order to minimize the present value of income tax payments?


    a.     Use the LIFO inventory method instead of FIFO durating periods of rising prices
    b.     Depreciate fixed assets on the straight-line method rather than the MACRS method
    c.     Capitalize exploration costs instead of expensing them
    d.     All of the above


Question: 40
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

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