Financial Accounting > QUESTIONS & ANSWERS > CPA Exam Review questions and answers (All)
Managerial Accounting deals with _____ accounting, while Financial Accounting deals with _____. Correct Answer: Internal; External True or False: Managerial accounting must follow GAAP. Correct Ans... wer: False; Internal accounting so it does not have to follow GAAP. The assumption that a company or other entity will be able to continue operating for a time that is sufficient to carry out its commitments and obligations. Correct Answer: Going Concern The assumption that a company's business cycle can be broken into periods (i.e. one year, one quarter, etc.) Correct Answer: Periodicity Accounting is reported as units of currency (i.e. dollars and cents); not indexed for inflation Correct Answer: Monetary Unit An accounting principle that allows the accountant to keep business separate from personal (excludes legal) Correct Answer: Economic Entity What is the general rule for capitalization of Research & Development costs? Correct Answer: You can't capitalize R&D True or False: You accrue a contingency deemed to be reasonably possible Correct Answer: False: you accrue contingencies deemed to be probable. FASB ASC includes guidance for the _____. Correct Answer: SEC Accounting information that enables comparing a company's reporting of one accounting period to another. Correct Answer: Consistency Principle that requires companies to match expenses with related revenues Correct Answer: Matching What the company actually does vs. what the company says it does. Correct Answer: Substance over form FASB conceptual framework says that for financial reporting to be useful it must ______. Correct Answer: Provide information useful for making business and investment decisions. Materiality and Relevance are both defined by: Correct Answer: What influences or makes a difference to a decision maker [Show More]
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