1.The assumed continuation of a business entity in the absence of evidence to the contrary is an example of the accounting concept:
a) accrual
b) consistency
c) comparability
d) going concern
2.Historical cost has been the valuation basis most commonly used in accounting because of its:
a) timelessness
b) conservatism
c) reliability
d) accuracy
3.The allowance for doubtful accounts is an example of a(n):
a) expense accout
b) contra account
c) adjunct account
d) control account
4.Failure to record depreciation expense at the end of an accounting period results in:
a) understated income
b) understated assets
c) overstated expenses
d) overstated assets
5.Analysis of a firms balance sheet provides information on its liquidity, which is the ability to:
a) satisfy short-term obligations
b) maintain profitable operations
c) maintain past levels of preferred and common dividends
d) survive a major economic downturn
6.In order for a liability to exist:
a) there must be a past transaction or event
b) the exact amount must be known
c) the identity of the party to whom the liability is owed must be known
d) there must be an obiligation to pay cash in the future
7.Which of the following would NOT be classified as a current asset on a classified balance sheet?
a) Investment securities (trading)
b) Short-term investments
c) Intangible assets
d) prepaid expenses
8.Unearned rent would normally appear on the balance sheet as a:
a) plant asset
b) current liability
c) long-term liability
d) current asset