Match the accounting terminology to the definitions.
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Conservatism
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Materiality concept
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Disclosure principle
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Consistency principle
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A business should report the least favorable figures in the financial statement when two or more possible options are presented.
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A business’s financial statement must report enough information for outsiders to make knowledgeable decisions.
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A business should use the same accounting methods and procedures from period to period.
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A company must perform strictly proper accounting only for items that are significant to the business's financial situation.
Match the accounting terminology to the definitions.
-
Conservatism
-
Materiality concept
-
Disclosure principle
-
Consistency principle
-
A business should report the least favorable figures in the financial statement when two or more possible options are presented.
-
A business’s financial statement must report enough information for outsiders to make knowledgeable decisions.
-
A business should use the same accounting methods and procedures from period to period.
-
A company must perform strictly proper accounting only for items that are significant to the business's financial situation.
Related questions
Question 1
In recent years, the large CPA firms have performed a highvolume of consulting services for many of their audit clients. Thishas become a highly controversial issue, because it is allegedthat:
a. | The CPAs are not competent to perform these services. | |
b. | The potential of earning large revenues from audit clientsimpairs auditor independence. | |
c. | CPA firms are inclined to "cut corners" on the audits becausethey are devoting the bulk of their time to consulting. | |
d. | CPA firms are engaged in unfair competition with consultingfirms. |
Question 2
An auditor's report states: "...we do not express an opinion."This constitutes what type of opinion?
a. | Qualified. | |
b. | Adverse. | |
c. | Unqualified. | |
d. | Disclaimer. |
Question 3
Which statement is NOT true?
a. | The FASB is a federal regulatory agency. | |
b. | The FASB encourages comments on exposure drafts from interestedthird parties. | |
c. | To date, the FASB has issued over 100 authoritativepronouncements. | |
d. | Pronouncements of GAAP-establishing bodies preceding the FASBwere widely criticized for lacking a theoretical basis. |
Question 4
Third parties are NOT entitled to place any reliance upon a CPAin the case of what type of engagement?
a. | Compilation. | |
b. | Compliance audit. | |
c. | Attestation. | |
d. | Review. |
Question 5
Which statement best reflects the business entity concept?
a. | It is assumed that the entity will continue in businessindefinitely. | |
b. | The financial results of legally separate entities should not becombined. | |
c. | The business is viewed as an entity separate from theowners. | |
d. | Entities should report their results of operations annually. |
Question 6
Which principle determines the fiscal period in which an expenseshould be recorded?
1. | Realization. | |
2. | Matching. | |
3. | Fiscal period | |
4. | Conservatism. |
Question 7
Form 10-Qis used for:
a. | Annual reporting to the SEC. | |
b. | Quarterly reporting to the SEC. | |
c. | Reporting of special events to the SEC. | |
d. | Determination of standards to be followed in reporting to theSEC. |
Question 8
Which of the following attributes is the primary argument forthe historical cost principle?
a. | Predictive value. | |
b. | Relevance. | |
c. | Understandability. | |
d. | Verifiability. |
Question 9
The standard, unqualified audit report of a public company:
a. | Is addressed to the SEC. | |
b. | Covers the financial statements but not the footnotes. | |
c. | States that the financial statements are fairly presented inaccordance with GAAP. | |
d. | More than one of the above is correct. | |
e. | None of the above are correct. |
Question 10
The most frequent cause of audit failure in audits of publiccompanies is:
a. | Incompetence or improper supervision of audit staff. | |
b. | Cleverly concealed employee frauds. | |
c. | Unwillingness of the partner in charge to compel the client tocorrect misleading financial statements. | |
d. | Bribery of key audit personnel by the audit client. |
Question 11
In most audits, the greatest concern faced by the auditor is therisk of:
a. | Clerical errors not detected by the client's system of internalcontrol. | |
b. | Incompetence and carelessness of audit staff. | |
c. | Management fraud. | |
d. | Employee irregularities. |
