Question 1: Which statement best describes the accounting cycle of a business?
a. It's set by the securities & exchange commission and is an average of all business cycles.
b. It corresponds with the natural business cycle running from one low point in the cycle to the next low point.
c. it begins with the recording of the first economic transaction in an accounting period and runs through the post-closing trial balance.
d. it begins with the disbursement of cash for inventory items and runs through the collection of cash from their sale.
Question 2: In March 2016 the Taylor company sells a building to the Carla company. At that time, the building's original cost on Taylor books is $250,000. The book value of the building is $150,000. The building was listed for sale at $190,000, appraised for taxes at $173,000 and sold to Carla company for $177,000 cash. At what value should Carla company record the building and for which reason?
a. $150,000 based on the going concern principle
b. $173,000 based on conservatism principle
c. 177,000 based on the historical cost principle
d. $250,000 based on the full disclosure principle