Generally Accepted Accounting Principles (GAAP) MCQ Questions Answers

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

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

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

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

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

6. What is the tax implications of consolidation?

7. What impact does an accounting change typically have?

8. What is a contingent convertible bond issuance?

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

10. What is the conversion rate?

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

12. Which FASB Statement addresses the accounting for derivatives?

13. When should a contingent liability be reported financially?

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

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

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

17. Which would be a derivative instrument?

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

19. Why are uncollectible accounts receivable considered a contingency?

20. What is convertible debt?

21. What is comprehensive income?

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

23. Which FASB statement addresses convertible debt?

24. What is meant by 'hedging'?

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

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

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

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

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

30. What is a 'temporary difference'?

31. What entries are made to correct an error?

32. Another way of saying what comprehensive income is?

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

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

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

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

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

38. What is the purpose of consolidating financial statements?

39. Which would impairment not apply to?

40. What is a contingency in general?

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

42. 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?

43. What is a 'permanent difference'

44. What are direct costs?

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

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

47. What is a special purpose entity?

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

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

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

51. Why would a company issue stock dividend?

52. Which is a method of testing for impairment?

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

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

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

56. Which would not be included in comprehensive income?

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

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

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

60. Which is not a part of inventory?

61. General rule regarding the reporting of comprehensive income?

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

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

64. Which would qualify for capitalization of interest?

65. Which would be considered a discontinued operation?

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

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

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

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

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

71. Which FASB Statement addresses accounting for stock dividends?

72. What are 'eliminating entries'?

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

74. What is the date of abandonment?

75. What is a deferred tax asset?

76. Purpose of a derivative instrument?

77. What value should a contingency be booked at?

78. Which FASB statement addresses the capitalization of interest?

79. How often are consolidated financial statements prepared?

80. What is 'impairment'?

81. What is 'earnings per share'?

82. What is 'Work in Progress'?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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