Multiple-Choice Questions

1. What organization is the primary standard-setter in the United States?

a. Securities and Exchange Commission

b. Financial Accounting Standards Board

c. International Accounting Standards Board

d. American Institute of Certified Public Accountants

2. Which of the following is not a characteristic of useful information?

a. Relevance

b. Reliability

c. Conservatism

d. Comparability

3. Information that provides feedback about prior expectations is:

Relevant Reliable

a. YesYes

b. Yes No

c. No Yes

d. No No

4. Information that is representationally faithful is considered to be:

Relevant Reliable

a. Yes Yes

b. Yes No

c. No Yes

d. No No

5. Which of the following is not an assumption that underlies accounting?

a. Economic entity

b. Time-period

c. Continuity (going concern)

d. Historical cost

6. Which principle requires that expenses be recorded and reported in the same period as the revenue that it helped generate?

a. Matching

b. Historical cost

c. Revenue recognition

d. Conservatism

7. Taylor Company recently purchased a piece of equipment for $2,000 which would be paid within 30 days after delivery. At what point would the event be recorded in Taylor’s accounting system?

a. When Taylor signs the agreement with the seller.

b. When Taylor receives the asset from the seller.

c. When Taylor receives an invoice (a bill) from the seller.

d. When Taylor pays $2,000 cash to the seller.