ACG 5026 Exam 1 Practice Questions and Correct Answers
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Course
ACG 5026
Institution
ACG 5026
Earned and realized or realizable revenue recognition requires that revenue be recognized (recorded) only when:
Economic entity The activities of a business are considered to be independent and distinct from those of its owners or from other companies
Materiality Refers to whether or not a partic...
ACG 5026 Exam 1 Practice Questions
and Correct Answers
Earned and realized or realizable ✅revenue recognition requires that revenue be
recognized (recorded) only when:
Economic entity ✅The activities of a business are considered to be independent and
distinct from those of its owners or from other companies
Materiality ✅Refers to whether or not a particular amount is large enough to affect a
decision.
Comparability ✅Accounting information should enable users to identify similarities and
differences between sets of economic phenomena.
Timeliness ✅Financial reporting information must be available to decision makers
before it loses its capacity to influence decisions
Relevance ✅Information is useful if it has the ability to influence decisions.
Verifiability ✅Consensus among measures assures that the information is free of error.
Representational faithfulness ✅Accounting information should reflect the underlying
economic events that it purports to measure.
Monetary unit ✅The financial reports are presented in one consistent monetary unit,
such as U.S. dollars.
Going concern ✅A business is expected to have continuity in that it is expected to
continue to operate indefinitely.
Accounting period ✅The life of a business can be divided into discrete accounting
periods such as a year or quarter.
Normal debit balance ✅Does an asset account have a normal credit or debit balance?
Normal credit balance ✅Does an equity account have a normal credit or debit
balance?
Normal credit balance ✅Does a liability account have a normal credit or debit balance?
, Analyze, record, adjust, report, close ✅What are the steps in the accounting cycle?
Adjusting entries ✅occur after all the regular transactions have been recorded and
posted but before the financial statements are prepared, never affect the cash account,
usually affect one balance sheet and one income statement account, the fulfill the
matching principle
Balance sheet ✅Would cash (year end balance) be reported on the balance sheet,
income statement, or the statement of stockholders' equity?
Income statement ✅Would advertising expense be reported on the balance sheet,
income statement, or the statement of stockholders' equity?
Balance sheet and statement of stockholders' equity ✅Would common stock be
reported on the balance sheet, income statement, or the statement of stockholders'
equity?
Income statement ✅Would printing fees earned be reported on the balance sheet,
income statement, or the statement of stockholders' equity?
Statement of stockholders' equity ✅Would dividends be reported on the balance sheet,
income statement, or the statement of stockholders' equity?
Balance sheet ✅Would accounts payable be reported on the balance sheet, income
statement, or the statement of stockholders' equity?
Balance sheet ✅Would inventory be reported on the balance sheet, income statement,
or the statement of stockholders' equity?
Balance sheet ✅Would equipment be reported on the balance sheet, income
statement, or the statement of stockholders' equity?
Operating activity ✅does cash receipts from customers for services rendered relate to
an operating activity, an investing activity, or a financing activity?
Investing activity ✅does a purchase of equipment relate to an operating activity, an
investing activity, or a financing activity?
Investing activity ✅do proceeds from disposal of equipment relate to an operating
activity, an investing activity, or a financing activity?
Operating activity ✅does a change in depreciation relate to an operating activity,
investing activity, or a financing activity?
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