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Upwork Accounting Principles Test Answers - Part 1

#1 Question:
What was the purpose of the Sarbanes Oxley act, in general?

Answer: d. To better regulate public and private companies in the wake of recent accounting scandals


#2 Question:
How are third party adjustments to patient bills reflected in the financial statements?

Answer: b. As a deduction from revenue



#3 Question:
What is Form 10-K?

Answer: d. Annual financial reports filed with the SEC

#4 Question:
What is the accounting objective which best relates to the FIFO method?

Answer: b. Income Smoothing

#5 Question:
What is the accounting objective which best relates to the percentage of completion method?

    a. Conservatism
    b. Accurate Presentation
    c. Tax Minimization
    d. Income Smoothing

Answer: b. Accurate Presentation

#6 Question:
Companies of what size have been impacted the most by the SOX from a cost perspective?

    a. Mid-sized companies feel the impact the most
    b. There is no correlation between company size and the cost of implementing the provisions of the Act
    c. The larger companies as the larger the company, the more it has to pay to implement the provisions of the Act
    d. The smaller companies as the cost of implementing the provisions of the Act does not decrease proportionally with the size of the company

Answer: c. The larger companies as the larger the company, the more it has to pay to implement the provisions of the Act

#7 Question:
What is the acronym for an organization that promotes the international harmonization of accounting standards?

    a. SEC
    b. IASC
    c. FASB
    d. None of the above

Answer: b. IASC

http://evikurniawati56.blogspot.com/2012/05/international-accounting-harmonization.html
http://en.wikipedia.org/wiki/International_Accounting_Standards_Committee


#8 Question:
Which FASB sets the requirements for accounting for Non-Profit organizations?

    a. FASB SFAS 999
    b. FASB SFAS 100
    c. FASB SFAS 99
    d. FASB SFAS 117

Answer: d. FASB SFAS 117

#9 Question:
What is form 10-Q?

    a. Monthly filing with the SEC reporting director salaries
    b. As needed filing to disclose any significant issues or changes
    c. Quarterly financial reports filed with the SEC
    d. Annual financial reports filed with the SEC

Answer: c. Quarterly financial reports filed with the SEC

#10 Question:
Which of the following is not an example of the accounting practices followed by a firm having wide flexibility in the choice of alternative methods for financial reporting?

    a. Accounting for depreciation
    b. Accounting for investment in common stocks
    c. Accounting for inventories
    d. None of the above

Answer: d. None of the above

#11 Question:
What is the accounting objective which best relates to the straight line method?

    a. Profit Maximization
    b. Conservatism
    c. Tax Minimization
    d. None of the above

Answer: b. Conservatism

#12 Question:
Which of the following accounts may appear on a company's balance sheet when the incomes for financial and tax reporting are different?

    a. Income tax expenses
    b. Deferred income tax liability
    c. Sales tax expenses
    d. All of the above

Answer: b. Deferred income tax liability

#13 Question:
Which doctrine lays down that a firm should account for a given set of operations so as to make reported net income as large as possible?

    a. Least and latest rule
    b. Profit maximization
    c. Income smoothing
    d. None of the above

Answer: b. Profit maximization

#14 Question:
What is the accounting objective which best relates to the Lower of Cost or Market Price method?

    a. Accurate Presentation
    b. Tax Minimization
    c. Profit Maximization
    d. Conservatism

Answer: d. Conservatism

http://www.accountingcoach.com/online-accounting-course/27Xpg01.html


#15 Question:
In which years were the Securities & Exchange Acts created?

    a. 1980 and 1981
    b. 1933 and1934
    c. 1920 and 1930
    d. 1802 and 1920

Answer: b. 1933 and1934

http://en.wikipedia.org/wiki/Securities_Act_of_1933
http://en.wikipedia.org/wiki/Securities_Exchange_Act_of_1934


#16 Question:
What is the accounting objective which best relates to the expensing of R&D costs?

    a. Income Smoothing
    b. Accurate Reporting
    c. Conservatism
    d. Profit Maximization

Answer: a. Income Smoothing

#17 Question:
What is the accounting objective which best relates to the weighted average inventory method?

    a. Tax Minimization
    b. Income Smoothing
    c. Profit Maximization
    d. None of the above

Answer: b. Income Smoothing

#18 Question:
What is the qualitative accounting objective suggesting that information reported in a financial statement should correspond as precisely as possible to the economic effects underlying transactions and events?

    a. Conceptual Framework
    b. Quality of Financial Position
    c. Accurate Presentation
    d. Least and Latest Rule

Answer: c. Accurate Presentation

#19 Question:
How is an unconditional promise to give a donation to a charity accounted for by the charity?

    a. Not recorded at all until 100% contribution is received
    b. Never recorded even after receipt
    c. As revenue only when the donation is made
    d. As revenue when the promise is made

Answer: c. As revenue only when the donation is made


#20 Question:
What is the accounting objective which best relates to the completed contract method?

    a. Income Smoothing
    b. Profit Maximization
    c. Tax Minimization
    d. None of the above

Answer: a. Income Smoothing

#21 Question:
What change was made in regarding the penalization of the whistleblowers (people who alert the authorities about the illegal activities in a corporation) by the companies?

    a. They are now themselves subject to fraud charges for uncovering the crimes
    b. They are put under witness protection
    c. They are offered a transfer to a new department
    d. They are now protected against retaliation by the company in order to encourage employees to bring the wrong doings of the companies to light

Answer: d. They are now protected against retaliation by the company in order to encourage employees to bring the wrong doings of the companies to light


#22 Question:
What is the acronym for the agency authorized by the U.S. Congress to regulate the financial reporting practices of most public corporations?

    a. SEC
    b. IASC
    c. FASB
    d. None of the above

Answer: a. SEC


#23 Question:
What is 'paying the least amount of taxes as late as possible within the law to minimize the present value of tax payments for a given set of operations' a description of?

    a. Profit Maximization
    b. Least and Latest Rule
    c. Conservatism
    d. Income Smoothing

Answer: b. Least and Latest Rule

#24 Question:
Which of the following methods is normally considered to be acceptable for financial reporting?

    a. MACRS
    b. Lower of cost or market price for inventories
    c. Direct write off of uncollectible accounts
    d. Capitalization of R&D Costs

Answer: a. MACRS

#25 Question:
Which of the following is a valid criticism of the SOX?

    a. It has made regulations more strict
    b. It has made foreign companies reluctant to register on US stock exchanges due to the burden of SOX reporting
    c. It allows for looser corporate standards
    d. It makes a few people accountable for the misdeeds of a corporation

Answer: b. It has made foreign companies reluctant to register on US stock exchanges due to the burden of SOX reporting

#26 Question:
What is the effect of the SOX on public companies?

    a. It has made regulations more strict
    b. It has added accountability to the upper management
    c. It has forced companies to look at their internal controls
    d. All of the above

Answer: a. It has made regulations more strict

#27 Question:
Which of the following is true of the Sarbanes Oxley Act?

    a. It has bolstered investor confidence
    b. It has increased all stock prices
    c. It has increased the number of foreign corporations registering in the US
    d. It has created more work for corporate accounting departments

Answer: a. It has bolstered investor confidence

#28 Question:
What change was made to the internal controls of the companies by the SOX?

    a. All company processes and related internal controls now need to be documented and then tested by an outside auditing firm
    b. Companies no longer have to document their internal controls since the auditors do the job
    c. Internal controls can be more lax than before
    d. Companies have to provide for internal controls only to satisfy the auditors

Answer: c. Internal controls can be more lax than before


#29 Question:
What are the 3 types of Health Care Organizations for accounting purposes?

    a. Incorporated, Limited Liability, Sole Proprietor
    b. Asset based, Liability based, Expense based
    c. Investor-owned, Non-Profit, Governmental
    d. Private, Public, LLC

Answer: c. Investor-owned, Non-Profit, Governmental


#30 Question:
What is the acronym for an independent board responsible, since 1973, for establishing generally accepted accounting principles?

    a. SEC
    b. IASC
    c. FASB
    d. None of the above

Answer: c. FASB

#31 Question:
Who can review the filings made by public companies with the SEC?

    a. Only company executives
    b. Anyone using the EDGAR system
    c. Only law enforcement officials
    d. Only the staff of the SEC and the company executives

Answer: b. Anyone using the EDGAR system

#32 Question:
What are forms 10K and 10Q referred to as?

    a. Periodic Filings
    b. Financial Statements
    c. Information Returns
    d. Tax Returns

Answer: a. Periodic Filings


#33 Question:
What is the purpose of a Registration Statement?

    a. To offer securities to the public
    b. To disclose the operations during the first year
    c. To provide information to the public about a company before it is traded publicly
    d. Financial records for the company from inception to date

Answer: c. To provide information to the public about a company before it is traded publicly

4 Question:
What value should a contribution be accounted for at?

    a. Historical value
    b. Fair value
    c. Market value
    d. Value determined by auditors

Answer: d. Value determined by auditors


#35 Question:
When is revenue normally recognized for financial reporting?

    a. At the point of sale
    b. While cash is being collected
    c. After all cash has been collected
    d. At the end of each year

Answer: c. After all cash has been collected

#36 Question:
Which of the following methods would be employed to help accomplish the following objective: smoothing a firm's income as a means of minimizing large fluctuations in the price of its stock.

    a. Weighted average inventory
    b. Percentage of completion method for long term construction contracts
    c. Straight line amortization of patents
    d. All of the above

Answer: a. Weighted average inventory


#37 Question:
For which of the following would the use of the straight-line method of amortization be acceptable?

    a. Building
    b. Patent
    c. Goodwill
    d. All of the above

Answer: d. All of the above


#38 Question:
What is the accounting objective which best relates to the disclosing of the cost of employee stock options (not expensing)?

    a. Conservatism
    b. Profit Maximization
    c. Income Smoothing
    d. Tax Minimization

Answer: a. Conservatism

#39 Question:
What change was made by the Act regarding the authority competent to sign the company tax returns?

    a. Only the CEO now has the authority to sign the company tax returns
    b. Any employee can now sign a tax return
    c. Only the firm's CPA can sign the tax returns
    d. Only the person who has prepared the return can sign it

Answer:


#40 Question:
What is form 8-K?

    a. Monthly filing with the SEC reporting director salaries
    b. As needed filing to disclose any significant issues or changes
    c. Quarterly financial reports filed with the SEC
    d. Annual financial reports filed with the SEC

Answer: b. As needed filing to disclose any significant issues or changes

Form 8-K is a very broad form used to notify investors of any material event that is important to shareholders or the United States Securities and Exchange Commission. This is one of the most common types of forms filed with the SEC. After a significant event like bankruptcy or departure of a CEO,
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#42 Question:
For which of the following accounts would the use of 'the lower of cost or market price' principle be acceptable?

    a. Inventory
    b. Land
    c. Prepaid rent
    d. All of the above

Answer: a. Inventory

#43 Question:
What is the acronym for the independent board responsible, since 1973, for establishing generally accepted accounting principles?

    a. GAAP
    b. IASC
    c. SEC
    d. FASB

#44 Question:
What entry would a donor make when giving a cash donation to a charity?

    a. Dr: Revenue, Cr: Cash
    b. Dr: Expense – Cash, Cr: Cash
    c. Dr: Liability, Cr: Cash
    d. Dr: Expense – Contributions, Cr: Cash

Answer: a. Dr: Revenue, Cr: Cash


#45 Question:
Which of the following is a method of accounting for the exploration costs of a mineral resource that would best attain the objective of income tax accounting?

    a. Expense in total when incurred
    b. Capitalize only the costs related to mineral deposits
    c. Capitalize all costs associated with productive as well as non-productive mineral deposits
    d. None of the above

Answer: a. Expense in total when incurred

#46 Question:
What is the accounting objective which best relates to the double declining balance method?

    a. Conservatism
    b. Income Smoothing
    c. Profit Maximization
    d. Tax Minimization

Answer: a. Conservatism


#47 Question:
Which of the following must generally be used for financial reporting if it is used for income tax reporting?

    a. FIFO
    b. LIFO
    c. NIFO
    d. Installment sales method

Answer: a. FIFO


#48 Question:
How are services donated by a CPA accounted for by a non-profit organization?

    a. Dr: Expenses, Cr: Revenue
    b. Dr: Revenue, Cr: Liability
    c. Dr: Expenses, Cr: Assets
    d. Dr: Revenue, Cr: Expenses

Answer: b. Dr: Revenue, Cr: Liability

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