ACCOUNTING FOR PROFESSIONALS
1.
An accountant charged the Repairs Expense account for a tool that cost $12. The tool had an
estimated useful life of five years; however, the accountant did not choose to depreciate it. The
modifying convention that the accountant followed was:
a. industry practice
b. objectivity
c. materiality
d. conservatism
2.
General-purpose financial statements are the product of:
a. both financial and managerial accounting
b. managerial accounting
c. financial accounting
d. financial, managerial, and cost accounting
3.
The Financial Accounting Foundation:
a. oversees the operations of the FASB
b. oversees the operations of the TASB
c. provides information to governmental units on financial reporting issues
d. oversees the operations of the NAACP
4.
The scope (middle, second) paragraph of the standard audit report on the company's financial
statements does not include the statement:
a. "I agree with generally accepted accounting principles."
b. "An audit includes assessing the accounting principles used."
c. "Audit provides a reasonable basis for an opinion."
d. "Perform the audit to obtain reasonable assurance."
5.
In auditing, which one of the following is the least important reason for the auditor's obtaining
an understanding of a company's internal control?
a. to plan substantive tests
b. to identify categories of potential misstatements
c. to consider variables that affects the risk of material misstatement
d. to serve as a basis for constructive suggestions
6.
If financial statements contain a "compartmentalized" departure from GAAP, the auditor
should render a(n):
a. assertive opinion with reference to departure
b. disclaimer
c. qualified "except for" opinion with reference to departure
d. adverse opinion with scope limitation reference
7.
A company has sales of $100,000, ending finished goods inventory of $9,000, variable
manufacturing costs of $50,000, and fixed manufacturing costs of $28,000 for the year.
Assuming the company uses direct costing, the manufacturing margin for the year is:
a. $59,000
b. $13,000
c. $31,000
d. $22,000
8.
Farr Company received merchandise on consignment. As of January 31, Farr included the
goods in inventory, but did not record the transaction. The effect of this on the financial
statements for January 31 would be:
a. net income was incorrect and current assets were overstated
b. net income, current assets, and retained earnings were overstated
c. current assets and net income were understated and current liabilities were overstated
d. current assets and retained earnings were understated
9.
Weaver Company has been using the LIFO method of inventory valuation for 10 years, since it
began operations. Its 2011 ending inventory was $50,000, but it would have been $70,000 if
FIFO had been used. Thus, if FIFO had been used, Weaver's income before income taxes
would have been:
a. $20,000 less in 2011
b. $20,000 less over the 10-year period
c. $20,000 greater in 2011
d. $20,000 greater over the 10-year period
10. Which one of the following types of payments are not taxable wages for federal unemployment
tax?
a. retirement pay
b. payment under guaranteed annual wage plan
c. dismissal pay
d. cash prizes for doing outstanding work
Accounting for Professionals Answer Key
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
C
C
A
A
D
C
A
B
D
A
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