Draft
Report:
STUDY GUIDE
District:
Wake County
Test:
9_12 Business and IT BA20 - Accounting II Test 3
Description: ES 1 QUESTIONS
Form:
501
1. Stan Stanley, a stockholder of Hubble Corporation, has just received a set of financials. Although he took Accounting 1 in
high school, he really did not pay much attention to his studies. While looking at these financials, he sees the words Net
Income, Dividends Paid, and Stocks Issued on a sheet. What financial statement is Stan viewing?
(NCCTE.9_12.BE.BA20.CA1.01)
A. Balance Sheet
B. Income Statement
C. Statement of Cash Flow
D. Statement of Stockholders Equity
2. Stan Stanley, a stockholder of Hubble Corporation, has just received a set of financials. Although he took Accounting 1 in
high school, he really did not pay much attention to his studies. While looking at these financials, he sees the words
Operating Activities, Investing Activities, and Financing Activities on a sheet. Which financial statement is Stan viewing?
(NCCTE.9_12.BE.BA20.CA1.01)
A. Balance Sheet
B. Income Statement
C. Statement of Cash Flow
D. Statement of Stockholders Equity
3. Stan Stanley, a stockholder of Hubble Corporation, has just received a set of financials. Although he took Accounting 1 in
high school, he really did not pay much attention to his studies. While looking at these financials, he sees the words Assets,
Liabilities, and Stockholders Equity on a sheet. Which financial statement is Stan Viewing?
(NCCTE.9_12.BE.BA20.CA1.01)
A. Balance Sheet
B. Income Statement
C. Statement of Cash Flow
D. Statement of Stockholders Equity
4. Susan Sorry has just started her company. She sells sea shells by the sea shore. Since this is her first year of operations, she
ACCOUNTING II HONORS – ESSENTIAL STANDARD 1
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wants to show as large of a profit as she can to impress her stockholders. When she is preparing her year-end financials,
Susan decides to wait and list some expenses of her business until next year, when her profit will be higher. Which principle
keeps Susan from inadequately accounting for these costs? (NCCTE.9_12.BE.BA20.CA1.01)
A. Cost Principle
B. Full Disclosure Principle
C. Revenue Recognition Principle
D. Matching Principle
5. Harley's Hoog BBQ owns and operates several Barbeque Restaurants. In 2004, Harley, the owner, took out a loan for his
business in the amount of $100,000. The loan will be completely paid off within 6 months. When preparing the financial
statements of the business, Harley opted not to list the loan, since it was so close to maturity. Which principle did Harley's
Hog violate? (NCCTE.9_12.BE.BA20.CA1.01)
A. Cost Principle
B. Full Disclosure Principle
C. Revenue Recognition Principle
D. Matching Principle
6. The Furniture Company prepares its financial statements four times per year. Which assumption is the Furniture Company
following? (NCCTE.9_12.BE.BA20.CA1.01)
A. Business Entity Assumption
B. Going Concern Assumption
C. Monetary Unit Assumption
D. Time Period Assumption
7. Joe Blake is the president and primary stockholder of Blake Enterprises. He just found out that his company may file
bankruptcy and go out of business. When preparing the company's financial statements, Joe withholds this information
from the accountants. Which of the following assumptions is he violating? (NCCTE.9_12.BE.BA20.CA1.01)
A. Business Entity Assumption
B. Going Concern Assumption
C. Monetary Unit Assumption
D. Time Period Assumption
ACCOUNTING II HONORS – ESSENTIAL STANDARD 1
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8. Tasty Bakery, Inc. offers bakery items and performs catering services to customers. Tasty entered into a contract with a
local high school prom committee to provide catering services during the prom. The contract was dated October 15, 20xx;
however the prom would not be held until the following April. Tasty requires a deposit of $700 to be included with the
contract. The accountant for Tasty is unsure how to handle this transaction. What concept should he look to for guidance?
(NCCTE.9_12.BE.BA20.CA1.01)
A. Measurement Concept
B. Recognition Concept
C. Reality Concept
D. Materiality Concept
9. The Jonas Music Store received inventory for the new school year from a company in Great Britain. The invoice was stated
in terms of British pounds. The accountant is unsure how to account for this transaction. What concept should the
accountant follow? (NCCTE.9_12.BE.BA20.CA1.01)
A. Measurement Concept
B. Recognition Concept
C. Reality Concept
D. Materiality Concept
10. Hardwick Corporation is based in the United States. When preparing its financial statements, the corporation failed to
include a large credit sale to a customer in the general ledger, which was made on December 31st. What concept is
Hardwick Corporation violating? (NCCTE.9_12.BE.BA20.CA1.01)
A. Measurement Concept
B. Recognition Concept
C. Reality Concept
D. Materiality Concept
11. When the accountant has to choose between two acceptable alternatives, the accountant should select the alternative that
will report less profit, less asset amount, or a greater liability amount. This is based upon which principle/guideline?
(NCCTE.9_12.BE.BA20.CA1.01)
A. Cost Effectiveness Constraint
B. Materiality Constraint
C. Conservatism Constraint
D. Recognition Constraint
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12. During the preparation of the Furniture Company's financial statement, one of the accountants has to decide between two
alternative methods of valuing Uncollectible Account. He decides to choose the method that reports the highest amont.
Which constraint did the accountant follow? (NCCTE.9_12.BE.BA20.CA1.01)
A. Cost Effectiveness Constraint
B. Materiality Constraint
C. Conservatism Constraint
D. Recognition Constraint
13. Peter is a shareholder of Peppers Corporation. While preparing the year-end financial statements, Peppers Corporation
failed to disclose a substantial, pending lawsuit against the corporation. Which quality of accounting information was
violated? (NCCTE.9_12.BE.BA20.CA1.01)
A. Reliability
B. Relevance
C. Comparability
D. Consistency
14. Jackson Corporation has just published its annual financial report. The corporation reported transactions using the same
accounting treatmeant as in the previous year. Which of the qualities did they follow? (NCCTE.9_12.BE.BA20.CA1.01)
A. Relevance
B. Reliability
C. Comparability
D. Consistency
15. Todd Jones, CPA, is preparing the financial statements of XYZ Corporation. Todd makes sure that information capable of
making a difference in a user's decision making is included in the financial statements. Which quality of accounting
information has been followed? (NCCTE.9_12.BE.BA20.CA1.01)
A. Relevance
B. Reliability
C. Comparability
D. Consistency
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16. John has been a Certified Public Accountant for 15 years. While auditing a publicly traded company, John finds
fraudulent information that is intended for the company's shareholders. Which governing body should John advise of the
finding? (NCCTE.9_12.BE.BA20.CA1.01)
A. FASB
B. GAAP
C. AICPA
D. SEC
17. John has been a Certified Public Accountant for 15 years. Recently, he has learned that a new set of principles based
standards, interpretations, and framework has been adopted by the US and other Global Countries. To better prepare
himself, John should learn about the? (NCCTE.9_12.BE.BA20.CA1.01)
A. FASB
B. GAAP
C. GASB
D. IFRS
18. Grace & Associates, a CPA firm, is preparing an audit for GWM Corporation. Grace discovers that the financial
statements have been intentionally altered to reflect a higher net income. To complete the audit quickly, Grace decides to
leave this matter out of the audit report. Which specific rule of conduct does Grace violate?
(NCCTE.9_12.BE.BA20.CA1.02)
A. Confidential client information
B. Contingent fees
C. Independence
D. Integrity and objectivity
19. Joseph Miller, CPA is preparing an audit for LRK Merchandising. During the audit year, the finance officer for LRK was
terminated and charged with embezzlement. Because the case has not yet gone to court and the finance officer is a close
friend of Miller, he chooses not to include information regarding the case in the audit report. Which specific rule of
conduct does Miller violate? (NCCTE.9_12.BE.BA20.CA1.02)
A. Confidential client information
B. Contingent fees
C. Independence
D. Intergrity and objectivity
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20. Bob Martin, CPA delivers training workshops for CPA exam candidates. In acquiring resources for his workshops, he
offers each candidate $100 to provide him information on questions from the exam. Which specific rule of conduct is
Martin violating? (NCCTE.9_12.BE.BA20.CA1.02)
A. Advertising and other forms of solicitation
B. Acts discreditable
C. Contingent fees
D. Independence
21. Bill Carpenter, a CPA, is the Western region board member for NC FBLA. Bill 's firm, Carpenter & Associates, has been
asked to prepare the audit for NC FBLA, and has asked that Bill be the lead auditor for the job. What specific rule of
conduct will prevent Bill from accepting the offer?
(NCCTE.9_12.BE.BA20.CA1.02)
A. Advertising and other forms of solicitation
B. Commission and referral fees
C. Confidential client information
D. Independence
22. Michaels & Company, a CPA firm, has created a website in hopes of acquiring new clients. The website states "With
Michaels & Company, your refunds will ALWAYS be bigger." Which specific rule of conduct is being violated?
(NCCTE.9_12.BE.BA20.CA1.02)
A. Advertising and other forms of solicitation
B. Commissions and referral fees
C. Contingent fees
D. Form of organization and name
23. Buck Dollar recently completed his CPA certification and is opening an office. He wants the business to be known as $AVU-BUCK$. Which specific rule of conduct does this violate? (NCCTE.9_12.BE.BA20.CA1.02)
A. Independence
B. Commissions and referral fees
C. Contingent fees
D. Form of organization and name
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24. Villanova CPA Firm is preparing an audit for Western Regional Library Association. Information related to the library's
debt is not included in the financial statements. Which general standard has been violated?
(NCCTE.9_12.BE.BA20.CA1.02)
A. Due professional care
B. Planning and supervision
C. Professional competence
D. Sufficient relevant data
25. Slim Stanley, CPA has not completed his personal income tax returns for the past five years. Which specific rule of
conduct has Slim violated? (NCCTE.9_12.BE.BA20.CA1.02)
A. Acts Discreditable
B. Confidential Client Agreement
C. Independence
D. Scope and Nature of Services
26. Johnson & Associates, a CPA firm, has received an order from a judge to provide copies of Mark Tate's tax return.
Johnson sends the copies to the court without contacting Mr. Tate for permission to release the information. Which
specific rule of conduct is Johnson & Associate following? (NCCTE.9_12.BE.BA20.CA1.02)
A. Acts Discreditable
B. Confidential Client Information
C. Contingent Fees
D. Independence
27. Russell & Associates, a CPA Firm has received a request from Sally Thompson for her tax records. Russell refuses to
releases the records. Which specific rule of conduct is Russell & Associates violating? (NCCTE.9_12.BE.BA20.CA1.02)
A. Acts Discreditable
B. Confidential Client Information
C. Contingent Fees
D. Independence
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28. Smith CPA Firm has accepted Tough Tire Company as an audit client. Tom Smith, owner of Smith CPA Firm, is the son
of Michael Smith, owner of Tough Tire Company. Which specific rule of conduct has Smith CPA Firm MOST LIKELY
violated? (NCCTE.9_12.BE.BA20.CA1.02)
A. Acts Discreditable
B. Confidential Client Agreement
C. Contingent Fees
D. Independence
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