ACCOUNTING INFO.

P51. The following published documents are part of the "due process" system used by the FASB in the evolution of a typical FASB Statement of Financial Accounting Standards:

1. Exposure Draft

2. Statement of Financial Accounting Standards

3. Discussion Memorandum

The chronological order in which these items are released is as follows:

• 1,2,3

• 1,3,2

• 2,3,1

• 3,1,2

53. Generally Accepted Accounting Principles include:

1) FASB Technical Bulletins,

2) APB Opinions, and

3) Widely-accepted industry practices.

These three items rank from most authoritative to least authoritative as follows:

• 1,2,3

• 1,3,2

• 2,1,3

• 2,3,1

54. Generally accepted accounting principles

• include detailed practices and procedures as well as broad guidelines of general application.

• are influenced by pronouncements of the SEC and IRS.

• change over time as the nature of the business environment changes.

• all of these.

21. Generally accepted accounting principles

• a. are fundamental truths or axioms that can be derived from laws of nature.

• b. derive their authority from legal court proceedings.

• c. derive their credibility and authority from general recognition and acceptance by the accounting profession.

• d. have been specified in detail in the FASB conceptual framework.

Which of the following is NOT an internal event?

• Depreciation

• Using raw materials in the production process

• Dividend declaration and subsequent payment

• All of these are internal transactions.

An accounting record into which the essential facts and figures in connection with all transactions are initially recorded is called the

• LEDGER

• ACCOUNT

• TRIAL BALANCE

• NONE OF THESE

The debit and credit analysis of a transaction normally takes place

• before an entry is recorded in a journal.

• when the entry is posted to the ledger.

• when the trial balance is prepared.

• at some other point in the accounting cycle.

A trial balance

• proves that debits and credits are equal in the ledger.

• supplies a listing of open accounts and their balances that are used in preparing financial statements.

• is normally prepared three times in the accounting cycle.

• all of these.

A trial balance may prove that debits and credits are equal, but

• an amount could be entered in the wrong account.

• a transaction could have been entered twice.

• a transaction could have been omitted.

• all of these.

External events DO NOT INCLUDE

• interaction between an entity and its environment.

• a change in the price of a good or service that an entity buys or sells, a flood or earthquake.

• improvement in technology by a competitor.

• using buildings and machinery in operations.