Multiple Choice (2 points each)

AC 211 Exam 1

1. SEC stands for:

Security Entity Council

Securities and Exchange Commission

Secure Exchange Council

none of the above

2. The first attempt at an accounting standards setting group was known as what?

SEC

AICPA

APB

FASB

3. The organization responsible for setting standards for Governmental Accounting is known as what?

FASB

SEC

GASB

AICPA

4. The IASB is involved in setting standards for what type of accounting?

Financial

Governmental

Accrual

International

5. Which basis for accounting only recognizes expenses when cash is actually paid out?

Accrual

Financial

Cash

Governmental

6. Which of the following is a challenge faced by financial accounting?

timeliness

non-financial measurements

soft assets

all of the above

7. The SEC has jurisdiction over all companies that?

prepare financial statements

have overseas operations

issue publicly traded stock

issue audited financial statements

8. Which organization is responsible for determining content and grading the CPA exam?

FASB

GASB

AICPA

APB

9. Which of the four basic assumptions of accounting assumes that the business will have a long life?

economic entity assumption

monetary unit assumption

going concern assumption

periodicity assumption

10. Which of the four basic assumptions of accounting assumes that economic activities can be divided into artificial time periods?

economic entity assumption

monetary unit assumption

going concern assumption

periodicity assumption

11. The original price paid for an asset is known as?

original cost

historical cost

financial cost

none of the above

12. The cost-benefit relationship states that?

costs should equal benefits

benefits should outweigh costs

costs should outweigh benefits

all of the above

13. The principle which states that when in doubt choose the solution that will be least likely to overstate assets and income is called?

materiality

industry practices

relevance

conservatism

14. According to the principle of consistency, which statement is true regarding changes in accounting procedures?

changes are not ever allowed

changes are allowed with adequate reasons and documentation

changes are always allowed

none of the above

15. According to the principle of full disclosure, items must be included in financial reports when?

the information would make a difference to users

the information would not make a difference to users

the information understandable

both a and c