1. Under current GAAP, most resources of a business entity are to be valued in its financial statements at:
a. a value that is most relevant to the needs of users of the financial statements
b. historical cost
c. the current cost of replacing the resource
d. current appraisal values
2. Auditors face ethical issues because:
a. GAAP permits various standards to be used to produce profits
b. auditors may express an opinion that may cause difficulty to employees of a company\
c. auditors may not discover insider trading
d. GAAP does not permit fraud
3. Which one of the following assumptions or principles most logically supports the preparation of a single set of consolidated financial statements that combines the financial information of several wholly owned but separately identifiable businesses?
a. historical cost
b. industry practices
c. entity
d. materiality