Wall Street Prep2 ALL ANSWERS 100% CORRECT SPRING FALL-2022 LATEST EDITION GUARANTEED GRADE A+
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Course
FIN 6710 (FIN6710)
Institution
Middle Tennessee State University
Question 1
The regulating body that oversees the development of accounting standards in the U.S. is:
SFAS GAAP FASB IASB
Your answer is correct.
FASB formulates accounting standards through the issuance of Statements of Financial Accounting Standards (SFAS). These statements make up the body ...
question 1 the regulating body that oversees the development of accounting standards in the us is
fasb formulates accounting standards through the issuance of statements
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FIN 6710 (FIN6710)
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Wall Street Prep2 ALL ANSWERS 100%
CORRECT SPRING FALL-2022 LATEST
EDITION GUARANTEED GRADE A+
Question 1
The regulating body that oversees the development of accounting standards in the U.S. is:
SFAS GAAP FASB IASB
Your answer is correct.
FASB formulates accounting standards through the issuance of Statements of Financial Accounting
Standards (SFAS). These statements make up the body of accounting rules known as the Generally
Accepted Accounting Principles (GAAP). IASB oversees international financial reporting standards
(IFRS).
See Lesson: Introduction Question 2
Which of the following statements is TRUE?
GAAP requires that firms show recorded values for acquired intangible assets such as patents and
trademarks on their financial statements
GAAP requires that firms show recorded values for intangible assets such as employee and customer
loyalty
GAAP requires that financial statements accurately reflects the market value of internally-developed
trademarks such as the value of the Coca-Cola brand name
All of the above
Your answer is incorrect.
GAAP requires that firms only show measurable activities, such as the value of acquired intangible
assets. Assets such as employee, customer loyalty and internally-developed trademarks are not shown
on financial statements because they’re difficult to quantify.
See Lesson: Basic Accounting Principles Question 3
Which of the following statements is TRUE?
Publicly traded US companies are required to file four 10-Q's and one 10-K annually
All US companies are required to file three 10-Q's and one 10-K annually
Publicly traded US companies are required to file three 10-Q's and one 10-K annually
Publicly traded US companies are required to file one 10-K annually; 10-Q's are typically filed but are
technically voluntary
Your answer is incorrect.
Publicly-traded US companies must file three quarterly (10-Q) reports at the end of their 1Q, 2Q and
3Q, and a 10-K at the end of their fiscal year.
See Lesson: Financial Reportings & Important Filings Question 4
The income statement is designed to measure:
the liquidity of a firm
how solvent a company has been
the income position of a firm at a point in time
Cash inflows/outflows generated over a period of time
the accrual-based accounting profits of a firm over a period of time Your answer is correct.
,The income statement is designed to show the operations of the business (revenues and associated
expenses). The balance sheet is designed to show a firm’s financial position, while the cash flow
statement shows the amount of cash generated by a firm.
See Lesson: Basic Accounting Principles Question 5
The Matching Principle states that:
Costs associated with making a product must be recognized at the end of the production process
Costs associated with making a product must be recognized immediately as incurred
Costs associated with making a product must be recognized during the same period as revenue
generated from that product
Costs associated with making a product must be recorded during the same period as the sales,
general, and administrative expenses that are also associated with the product
Your answer is incorrect.
Under the matching principle, costs associated with making a product must be recorded during the
same period as revenue generated from that product.
See Lesson: Basic Accounting Principles Question 6
During the current year, accounts receivable increased from $27,000 to
$41,000 and sales were $225,000. Based on this information, how much cash did the company collect
from its customers during the year?
$239,000
$225,000
$211,000
$252,000
$266,000
Your answer is incorrect.
Accounts receivable increased by $14,000, implying that the company did not collect that amount in
cash, so cash sales were $225,000-$14,000 =
$211,000.
See Lesson: Cash, Receivables & Prepaid Expenses Question 7
Use the following information provided to answer the question below:
Computer resellers Co. purchases $10,000 worth of computers from Dell on 9/30/14.
Computer resellers Co. receives a credit card order for $5,000 for the purchase of one quarter
of the computers on 11/1/14.
The computers are shipped to the customer on 11/30/14 Computer Sales Co.
cashes the $5,000 check on 12/31/14
Based on the accrual method of accounting, computer resellers should recognize revenue on which
date?
9/30/14
11/1/14
11/30/14
12/31/14
Your answer is incorrect.
According to the revenue recognition principle, a company cannot record revenue until that order is
shipped to a customer (only then is the revenue actually earned) and collection from that customer,
who used a credit card, is reasonably assured.
See Lesson: Revenue Recognition Question 8
Cash interest expense payments lead to:
Lower cash from operations
, Lower cash from investing activities Lower cash from
financing activities Lower debt balances
Higher retained earnings Your answer is
correct.
Cash interest expense lowers net income which in turn lowers cash from operations.
See Lesson: The Lemonade Stand, Part 4 Question 9
Which of the following is NOT a required SEC filing? 10-Q
10-K
Annual Report Form 14-A
Your answer is correct.
Companies are not required to file an annual report with the SEC. They create this report as part of
their marketing efforts to introduce the firm, its performance and financials to investors and the
general public.
See Lesson: Financial Reportings & Important Filings Question 10
Non-recurring unusual or infrequent items (such as a restructuring charge) are:
Reported net of tax after net income from continuing operations (i.e., below the line)
Reported pre-tax before net income from continuing operation (i.e., above the line)
Reported net of tax after net income as discontinued operations Amortized over the useful
life of the non-recurring asset
Your answer is incorrect.
Unusual or infrequent items are usually reported pre-tax before net income. Extraordinary charges,
discontinued operations, and changes due to accounting practices are reported after-tax after net
income.
See Lesson: Nonrecurring Items Overview Question 11
Which of the following is FALSE regarding revenue recognition? Revenues must be recorded
when they are earned and measurable
Under the percentage of completion method, revenues are recognized on the basis of the total work
completed during the accounting period
Revenue is earned when either an order is shipped or collection from a customer is reasonably assured
Under the completed contract method, revenues are recognized only when the entire project has
been completed
Your answer is correct.
According to the revenue recognition principle, a company cannot record revenue until that order is
shipped to a customer (only then, is the revenue actually earned) AND collection from that customer
is reasonably assured.
See Lesson: Basic Accounting Principles Question 12
The book value of equity in a business will grow when:
• a company generates interest income
• a company issues less dividends than net income during the period
• a company generates more cash sales than credit sales I only
II only III only
I and II only I, II, and III
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