1. The recognition principle states that:
costs should be recorded on the income statement whenever those costs can be reliably determined.
costs should be recorded when paid.
the costs of producing an item should be recorded when the sale of that item is recorded as revenue.
sales should be recorded when the payment for that sale is received.
sales should be recorded when the earnings process is virtually completed and the value of the sale can be determined.
2. A firm has common stock of $8,600; paid-in capital surplus of $11,700; total liabilities of $12,900; current assets of $15,100; and fixed assets of $27,200. What is the amount of shareholders' equity?
a. $29,400
b. $42,300
c. $33,200
d. $20,300