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Question 1 of 10
1. Question
Which of the following expenses can be accrued?
I. Rent
II. Goods received
III. Cost of goods sold
IV. Services renderedCorrect
Expenses that can be accrued are interest on loans, goods received, services rendered, wages for employees, taxes, commissions, utilities, and rent. On the other hand, revenues that can be deferred are, but not limited to, rent payments, prepaid insurance, and subscription expenses.
Incorrect
Expenses that can be accrued are interest on loans, goods received, services rendered, wages for employees, taxes, commissions, utilities, and rent. On the other hand, revenues that can be deferred are, but not limited to, rent payments, prepaid insurance, and subscription expenses.
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Question 2 of 10
2. Question
Which of the following principles refer to a feature of accrual accounting that requires revenues to be recognized on the income statement when realized and earned and not when cash is received?
Correct
In the revenue recognition principle, revenues are required to be recognized when realized and earned even if cash has not yet been received. There are five steps in revenue recognition: first is to identify the contract with a customer, second is to identify the performance obligations, third is to determine the transaction price, fourth is to allocate the prices, and last is to recognize revenue.
Incorrect
In the revenue recognition principle, revenues are required to be recognized when realized and earned even if cash has not yet been received. There are five steps in revenue recognition: first is to identify the contract with a customer, second is to identify the performance obligations, third is to determine the transaction price, fourth is to allocate the prices, and last is to recognize revenue.
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Question 3 of 10
3. Question
Which of the following are the criteria in revenue recognition under the generally accepted accounting principles?
I. There must be persuasive evidence of an arrangement.
II. A delivery must have occurred.
III. A service must have been rendered.
IV. The price must either be fixed or variable.Correct
There are four criteria in revenue recognition. The first criterion is to have persuasive evidence of an arrangement. The second criterion is to have a delivery occurred and a service rendered. The third criterion is to have a fixed price of seller for the buyer. The last criterion is to have a reasonably assured collectibility.
Incorrect
There are four criteria in revenue recognition. The first criterion is to have persuasive evidence of an arrangement. The second criterion is to have a delivery occurred and a service rendered. The third criterion is to have a fixed price of seller for the buyer. The last criterion is to have a reasonably assured collectibility.
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Question 4 of 10
4. Question
Which was deemed as the most illiquid among all current assets?
Correct
Inventories are deemed as the most illiquid among all current assets. It is excluded in computing for the quick ratio calculation because of its illiquidity. Illiquid assets are stocks or bonds that cannot easily and readily be sold or exchanged for cash without a substantial loss in value.
Incorrect
Inventories are deemed as the most illiquid among all current assets. It is excluded in computing for the quick ratio calculation because of its illiquidity. Illiquid assets are stocks or bonds that cannot easily and readily be sold or exchanged for cash without a substantial loss in value.
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Question 5 of 10
5. Question
Which of the following are considered illiquid assets?
I. Cash on hand
II. Cash equivalents
III. Private company interests
IV. Real estate investmentsCorrect
Private company interests, real estate investments, and some types of debt instruments are considered illiquid. On the other hand, cash and cash equivalents are liquid assets that can easily be converted while keeping its market value. It results to ease of the transfer of ownership due to its liquidity.
Incorrect
Private company interests, real estate investments, and some types of debt instruments are considered illiquid. On the other hand, cash and cash equivalents are liquid assets that can easily be converted while keeping its market value. It results to ease of the transfer of ownership due to its liquidity.
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Question 6 of 10
6. Question
Under FINRA Rule 4370, what must a business continuity plan contain?
Correct
A business continuity plan and emergency contact information shall be submitted as a requirement in FINRA Rule 4370. This plan must contain procedures relating to an emergency or significant business disruption. A business continuity plan, upon the request to FINRA staff, shall promptly be made available.
Incorrect
A business continuity plan and emergency contact information shall be submitted as a requirement in FINRA Rule 4370. This plan must contain procedures relating to an emergency or significant business disruption. A business continuity plan, upon the request to FINRA staff, shall promptly be made available.
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Question 7 of 10
7. Question
Which of the following must be addressed in a business continuity plan?
I. Data back-up and recovery
II. All mission-critical systems
III. Financial and operational assessments
IV. Human resource performancesCorrect
Each business continuity plan must address the data back-up and recovery, all mission-critical systems, alternate communications between members, employees, and customers, the alternate physical location of employees, and regulatory reporting. This is a requirement under FINRA Rule 4370 wherein elements of a business plan are flexible and tailored to the size and needs of a member.
Incorrect
Each business continuity plan must address the data back-up and recovery, all mission-critical systems, alternate communications between members, employees, and customers, the alternate physical location of employees, and regulatory reporting. This is a requirement under FINRA Rule 4370 wherein elements of a business plan are flexible and tailored to the size and needs of a member.
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Question 8 of 10
8. Question
Who is designated to approve the business continuity plan under FINRA Rule 4370?
Correct
The business continuity plan and emergency contact information shall be approved by a member of the senior management. They are also required to annually review it to check for revisions and changes. The member of the senior management who will conduct the review shall also be a registered principal.
Incorrect
The business continuity plan and emergency contact information shall be approved by a member of the senior management. They are also required to annually review it to check for revisions and changes. The member of the senior management who will conduct the review shall also be a registered principal.
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Question 9 of 10
9. Question
Which of the following terms denote to a system, by the most recent market price, of valuing assets?
Correct
Mark-to-market is a method of measuring the fair value of assets and liabilities on whose accounts can fluctuate over time. It denotes a system, by the most recent market price, of valuing assets or liabilities. Its purpose is to provide a realistic appraisal on a company’s financial situation based on the current market price.
Incorrect
Mark-to-market is a method of measuring the fair value of assets and liabilities on whose accounts can fluctuate over time. It denotes a system, by the most recent market price, of valuing assets or liabilities. Its purpose is to provide a realistic appraisal on a company’s financial situation based on the current market price.
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Question 10 of 10
10. Question
Which of the following statements are correct in relation to futures trading in mark-to-market?
I. Mark to market maintains an asset at its restated purchase cost.
II. Mark to market is contrasted using the average cost accounting.
III. Accounts in a futures contract are daily marked to market.
IV. Long and short positions are calculated through profit and loss.Correct
In relation to futures trading, profit and loss are calculated between long and short positions. Accounts are also marked to market daily to maintain an asset’s value at the original purchase cost. It is not contrasted with average cost accounting but it is contrasted with historical cost accounting.
Incorrect
In relation to futures trading, profit and loss are calculated between long and short positions. Accounts are also marked to market daily to maintain an asset’s value at the original purchase cost. It is not contrasted with average cost accounting but it is contrasted with historical cost accounting.