The Preparation of Financial Statements - Module 5 of 6


Question 1

The federal agency responsible for the regulation of publicly-held corporations is called

Question 2

Which of the following is a fundamental generally accepted accounting principle?

Question 3

Which of the following is a fundamental generally accepted accounting principle?

Question 4

Assume Acme Corporation wishes to record the acquisition of a costly and major asset at fair market value permitted by a new change in GAAP. The auditor concludes that Acme is in compliance with GAAP but wishes to note this unique acquisition under the new rule. The best course of action for the auditor would be to issue a(n)

Question 5

Acme Corporation engages in all of the following business practices. Which one is the most likely to comply with GAAP?

Question 6

Acme Corporation manufactures a weed killer that independent testing laboratories have proven causes serious, and possibly fatal, respiratory ailments. Acme expects significant and costly litigation to be likely in its immediate future and has estimated the value of the loss. Acme would therefore

Question 7

Acme Corporation wishes to declare a dividend. Which of the following alone would not be a reason to withhold the dividend?

Question 8

Acme Corporation’s board of directors want to make a dividend declaration that exceeds its surplus according to its balance sheet measured at book value but is less than its surplus if its assets and liabilities are “written up” to fair market value. May Acme do so?

Question 9

In U.S. v. Simon the court ruled that adherence to GAAP

Question 10

In U.S. v. Couch the U.S. Supreme Court ruled that the financial records of a person in the possession of her accountant are