General Generally Accepted Accounting Principles (GAAP) MCQs

1. Net Income is $150,000, dividends paid to preferred stock holder is $50,000 and weighted-avg number of common shares are 10,000. What is the basic EPS as per US GAAP?

2. Which of the following securities are reported on the balance sheet at amortized cost?

3. Your accounts payable increases from the prior year, what happens on the cash flow statement and in which section?

4. Which of the following securities are purchased with the intent of NEITHER holding them till maturity NOR to get profit over near term?

5. Which of the following securities are reported on balance sheets at fair value?

6. When should costs be recognized?

7. Cost of good sold (COGS) reflects the cost of the most recent purchase in which of the following inventory valuation methods?

8. Which of the following consists of cash inflows and outflows from transactions related to a firm's capital structure ?

9. ABC company purchases a plot of land for $10,000. In the following year the value of the land increases by 10%. What value should this asset be recorded as?

10. Which of the following is prohibited in US GAAP?

11. Which of the following is the correct formula for calculating basic EPS as per US GAAP?

12. In which of the following inventory valuation methods is the oldest cost of goods sold (COGS) entry processed first?

13. Your accounts receivable increases from the prior year, what happens on the cash flow statement and in which section?

14. In which of the following accounting methods is profit not recognized until cash payments are greater than the cost of property?

15. Which of the following securities are purchased with the intent to profit over near term?

16. Which of the following securities are purchased with the intent of holding them until maturity?

17. In which of the following are profits recognized in full when real estate is sold?

18. A financial record that uses a highly volatile currency would violate which of the following principles?

19. Which of the following is an Investing Activity as per US GAAP classification?

20. Which of the following is an Operating Activity as per US GAAP classification?

21. True or false? GAAP is internationally based, whereas IFRS is US-centric.

22. Your accounts payable drops from the prior year, what happens on the cash flow statement and in which section?

23. Which of the following is NOT a valid cost flow assumption for determining the inventory cost?

24. Your accounts receivable drops from the prior year. What happens on the cash flow statement and in which section?

25. Which of the following is the formula for return on equity (ROE)?

26. Which of the following correctly formulates current ratio?

27. Under GAAP principles, expenses have to be matched with revenues (as long as it's reasonable to do so). This is an example of which principle?

28. Which of the following best describes Going Concern?

29. The multiple-step income statement for a merchandiser shows each of the following features EXCEPT:

30. Which of the following is a US GAAP depreciation method for financial and tax reporting?

31. Which of the following consists of cash inflows and outflows from transactions that affect a firm's net income?

32. You pay a dividend, what happens on the cash flow statement and in which section?

33. Which of the following methods of presenting cash flow is permitted under US GAAP?

34. Account receivables are classified as which of the following?

35. When applying the full accrual method in retail land sales, which of the following conditions are required by GAAP?

36. Which of the following is NOT a non-current asset?

37. Which of the following is a Financing Activity as per US GAAP classification?

38. Under US GAAP, minority (non controlling) interest in a subsidary can be reported in which of the following sections of a balance sheet?

39. If Earnings before Interest and Taxes (EBIT) is $10,000, interest expense is $500 and number of outstanding common stocks are 20,000, which of the following is the value of interest coverage ratio?

40. In which of the following securities are unrealized gains and losses reported in Other Comprehensive Income (as a part of stockholder's equity)?

41. You receive a dividend, what happens on the cash flow statement and in which section?

42. Unrealized gain and losses of ________ securities are reported in the Income Statement.

43. You have depreciation for the past year, what happens on the cash flow statement and in which section?

44. Under US GAAP, when must the fair value of an acquired firm's "in process research and development" be estimated?

45. In the United States, which of the following organizations mandate that financial reports adhere to GAAP standards?

46. You declare a dividend. What happens on the cash flow statement and in which section?

47. Which of the following is a valid method to calculate impairment loss in case of a long lived asset?

48. Which of the following is TRUE about Impairment of assets?

49. If the Exercise Price of a purchased put option is greater than Market Price, which of the following is TRUE?

50. If the Exercise Price of a purchased call option is less than Market Price, then which of the following is TRUE?

51. Which of the following is the correct formula for calculating impairment losses on a loan?

52. Which of the following is a most conservative measure of liquidity?

53. Which of the following is TRUE about impairment loss of a non-revalued asset?

54. True or false? Private disclosure standards are governed by the SEC.

55. At what stage in the manufacturing cycle is Raw Materials?

56. What did APB 14-1 issued in 2008 do to the accounting rules related to convertible debt?

57. What did APB14-1 stipulate for retroactive reporting of convertible debt?

58. What is 'Work in Progress'?

59. What is 'earnings per share'?

60. What is 'impairment'?

61. How often are consolidated financial statements prepared?

62. Which FASB statement addresses the capitalization of interest?

63. What value should a contingency be booked at?

64. Purpose of a derivative instrument?

65. What is a deferred tax asset?

66. What is the date of abandonment?

67. When is the stock value of stock dividend determined?

68. What are 'eliminating entries'?

69. Which FASB Statement addresses accounting for stock dividends?

70. What number of shares is used in calculating basic EPS?

71. Why do firms distinguish income from continuing operations and income from discontinued operations?

72. Which FASB deals with the impairment of long lived assets?

73. What account is credited in accounting when impairment is booked?

74. Which word describe a situation when a contingent liability should be recorded?

75. Which would be considered a discontinued operation?

76. Which would qualify for capitalization of interest?

77. What is the effect of a stock split on a company's financial records?

78. What is the alternative to the capitalization of interest costs?

79. General rule regarding the reporting of comprehensive income?

80. Which is not a part of inventory?

81. How is the interest cost to be capitalized calculated?

82. What is the proper financial reporting treatment for a discontinued operation?

83. Under which situation would prior financial reports not have to be restated?

84. Which would not be included in comprehensive income?

85. What does the term derivative mean for accounting purposes?

86. Why are direct costs added to the value of the inventory?

87. Which of the FASB statements discusses the methodology to be applied when consolidating financial statements?

88. Which is a method of testing for impairment?

89. Why would a company issue stock dividend?

90. Which would be a contingency needing to be booked?

91. How are income taxes calculated in general for the current period?

92. What are the 3 important dates pertaining to the issuance of stock dividend?

93. What is a special purpose entity?

94. What is the accounting treatment of stock dividend when it is issued (not declared)?

95. Why would a company want to discontinue the operations of a division?

96. What are direct costs?

97. What is a 'permanent difference'

98. What interest rate would be used to calculate interest capitalization if there is no specific loan associated with the asset except just the overall company debt?

99. Which of the FASB statements discusses the accounting treatment of discontinued operations?

100. What is a contingency in general?

101. Which would impairment not apply to?

102. What is the purpose of consolidating financial statements?

103. Which of the FASB statements discusses how accounting changes are to be handled?

104. What is the primary goal of accounting for income taxes?

105. Who does an error correction financial report restatement benefit?

106. Why would a shareholder want to know what diluted EPS as compared to basic EPS?

107. What accounting principle(s) does the principle of impairment adhere to?

108. Another way of saying what comprehensive income is?

109. What entries are made to correct an error?

110. What is a 'temporary difference'?

111. Which would be an accounting change which would require a restatement of the previous financial reports?

112. What is stock dividend as compared to cash dividend?

113. Which FASB Statement addresses accounting for earnings per share?

114. What is the general rule for accounting for inventory?

115. What impact may a financial report restatement have on the current share price?

116. What is meant by 'hedging'?

117. Which FASB statement addresses convertible debt?

118. What is meant by the term 'dilution'?

119. What is comprehensive income?

120. What is convertible debt?

121. Why are uncollectible accounts receivable considered a contingency?

122. Which section of FASB deals with Accounting for Inventory Costs?

123. Which would be a derivative instrument?

124. What is a 'mark to market' adjustment?

125. Which of the FASB statements discusses the accounting standard for reporting comprehensive income?

126. Which is a requirement for the capitalization of interest?

127. When should a contingent liability be reported financially?

128. Which FASB Statement addresses the accounting for derivatives?

129. What is the definition of a 'discontinued operation'?

130. What is the conversion rate?

131. Purpose of stipulating exactly how earnings per share is calculated?

132. What is a contingent convertible bond issuance?

133. What impact does an accounting change typically have?

134. What is the tax implications of consolidation?

135. Why is the value of a derivative continually adjusted for accounting purposes?

136. Which FASB statement addresses the proper accounting for contingent liabilities?

137. Which one of the secondary purposes of accounting for income taxes?

138. What are companies required to present on their financial statements?

139. What is the requirement regarding the format of financial reports and comprehensive income?