GibsonTB_ch01 - CHAPTER 1-INTRODUCTION TO FINANCIAL...

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CHAPTER 1—INTRODUCTION TO FINANCIAL REPORTING MULTIPLE CHOICE 1. Charging off equipment that cost less than $20 would be an example of the application of: a. going concern b. cost c. matching d. materiality e. realization ANS: D PTS: 1 2. The going concern assumption: a. is applicable to all financial statements b. primarily involves periodic income measurement c. allows for the statements to be prepared under generally accepted accounting principles d. requires that accounting procedures be the same from period to period e. none of the answers are correct ANS: C PTS: 1 3. Understating assets and revenues is justified based on: a. realization assumption b. matching c. materiality d. realization e. none of the answers are correct ANS: E PTS: 1 4. The assumption that enables us to prepare periodic statements between the time that a business commences operations and the time it goes out of business is: a. time period b. business entity c. historical cost d. transaction e. none of the answers are correct ANS: A PTS: 1 5. Valuing assets at their liquidation values is not consistent with: a. conservatism b. materiality c. going concern d. time period e. none of the answers are correct ANS: C PTS: 1 1-1
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6. The business being separate and distinct from the owners is an integral part of the: a. time period assumption b. going concern assumption c. business entity assumption d. realization assumption e. none of the answers are correct ANS: C PTS: 1 7. The principle that assumes the reader of the financial statements is interested in the liquidation values is: a. conservatism b. matching c. time period d. realization e. none of the answers are correct ANS: E PTS: 1 8. An accounting period that ends when operations are at a low ebb is: a. a calendar year b. a fiscal year c. the natural business year d. an operating year e. none of the answers are correct ANS: C PTS: 1 9. The accounting principle that assumes that inflation will not take place or will be immaterial is: a. monetary unit b. historical cost c. realization d. going concern e. none of the answers are correct ANS: A PTS: 1 10. Valuing inventory at the lower of cost or market is an application of the: a. time period assumption b. realization principle c. going concern principle d. conservatism principle e. none of the answers are correct ANS: D PTS: 1 11. The realization principle leads accountants to usually recognize revenue at: a. the end of production b. during production c. the receipt of cash d. the point of sale e. none of the answers are correct ANS: D PTS: 1 1-2
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12. The comment that “it is not essential for items that are not material to be properly handled on the financial statements” is representative of: a. matching b. conservatism c. realization d. materiality e. none of the answers are correct ANS: D PTS: 1 13. The assumption that deals with when to recognize the costs that are associated with the revenue that is being recognized is: a. matching b. going concern c. consistency d. materiality
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This note was uploaded on 07/02/2009 for the course ACCT 4410 taught by Professor Brennan during the Spring '09 term at Georgia State.

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GibsonTB_ch01 - CHAPTER 1-INTRODUCTION TO FINANCIAL...

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