Question

GAAP refers to:  

            a.         General Association of Accounting Professionals

            b.         Generally Accepted Accounting Profession

            c.         Rules that assure consistency in reporting financial history

            d.         Rules that are set up to make sure each company reports

                        their own financial history.

Accounting is a process that:

            a.         Reports the profit and loss a firm makes

            b.         Reports the financial history of the firm

            c.         Reports information to external users of the financial statements.

            d.         Reports to the S.E.C.

There are four basic financial statements required by GAAP.  They are:  

            a.         Balance Sheet, Income Statement, Cash Flow Statement and

                        a Trial Balance.

            b.         Balance Sheet, Income Statement, Cash Flow Statement and

                        a Work Sheet.

            c.         Balance Sheet, Income Statement, Cash Flow Statement and

                        a Statement of Change to Owners Equity.

            d.         Balance Sheet, Income Statement, Cash Flow Statement and

                        a Post Close Trial Balance.

The three steps in transaction analysis are:

a.         Determine what accounts are affected, what their balance is and how much they have changed.

            b.         Determine what accounts are affected, what classification

                        the accounts are and how their balance has changed up or

                        down.

            c.         Check the chart of accounts, determine if the entry is a

                        Dr. or Cr., determine if the balance is going up or down

            d.         All of the above.

A Deferred Revenue is:

            a.         A revenue that has been received and earned.

            b.         A revenue that will not be collected in the future.

            c.         A revenue that has been received, but is a liability until earned.

            d.         A revenue that has been earned but not received.

In the Accrual Method of Accounting:

            a.         Adjusting entries have to be made that would not have to

                        be done in a Cash System.

            b.         You record a revenue when you earn it not when you are

                        paid for it.

c.         Gives you a better idea of your future financial position than the Cash Method.

            d.         All of the above.

Answer 1

Answers

• GAAP refers to:  Correct Answer c.         Rules that assure consistency in reporting financial history
  GAAP actually refers to generally Accepted Accounting principles. These provide basic accounting principles to be followed so that there is consistency and comparability possible.
• Accounting is a process that:
  Correct Answer a.         Reports the profit and loss a firm makes
• There are four basic financial statements required by GAAP.  They are:  

Correct Answer Option c.         Balance Sheet, Income Statement, Cash Flow Statement and a Statement of Change to Owners Equity.

• The three steps in transaction analysis are:

Correct Answer:             d.         All of the above.
Transaction analysis involves deciding which accounts are being affected and how. Whether they’d be debited or to be credited.

• A Deferred Revenue is:            c.         A revenue that has been received, but is a liability until earned.

These are recorded as ‘Unearned’ revenue as they are received in advance.

• In the Accrual Method of Accounting:

Correct Answer       d.         All of the above.
Under Accrual method, revenues and expenses are recorded when they are earned or incurred, whether received or paid in cash or not.
This requires adjusting entries.