11.Which one of the following statements best describes the concept of consistency?
a. When uncertainty exists, understating assets, overstating liabilities, accelerating recognition of losses, and delaying recognition of gains is preferred.
b. Accounting numbers are consistently market value.
c. Different firms use identical accounting measurement methods for similar events.
d. Similar events are measured using identical accounting procedures from period to period.
12.The valuation basis used to measure long-term liabilities is:
a. present value.
b. replacement cost.
c. fair market value.
d. historical cost.
13.The valuation basis used to measure accounts payable is:
a. fair value.
b. replacement cost.
c. face value.
d. present value.
14.Most companies prepare annual financial statements:
a. with a fiscal ending date of June 30.
b. on the calendar year.
c. at a different date each year.
d. every two weeks.
15.Which one of the following statements best describes objectivity?
a. When uncertainty exists, understating assets, overstating liabilities, accelerating recognition of losses, and delaying recognition of gains is preferred.
b. The measurement of an event is verifiable and reliable.
c. Different firms use identical accounting measurement methods for similar events.
d. Objectives are laid out that are conservative or too aggressive by management.
16.Which one of the following is violated when a firm has a policy of accelerating the recognition of depreciation expense during good years and decreasing depreciation expense during lean years?
a. Relevance
b. Matching
c. Consistency
d. Conservatism
17.Which one of the following is violated when a firm measures property, plant, and equipment at its estimated selling price?
a. Objectivity
b. Economic entity assumption
c. Materiality
d. Input markets
18.Ten years after a company purchases a plot of land, it is measured on the balance sheet at its cost from the year it was purchased instead of its current selling price. This accounting practice is justified by the:
a. financial period assumption.
b. going concern assumption.
c. fiscal period assumption.
d. original cost base.
19.The shareholders’ equity section of the balance sheet is:
a. a residual interest based on the book value of the company.
b. the amount for which the owner could sell the company.
c. valued at the present value of the dividends paid to shareholders.
d. the difference between the fair market value and the original cost of the company’s assets.
20.The valuation basis used to measure short-term investments is:
a. fair market value.
b. replacement cost.
c. original cost.
d. present value.