21) Supplies expense on the Team Shirts' income statement represents only supplies that were used to earn revenue during the accounting period. The accounting rule that applies is the ________.
A) going-concern assumption
B) historical-cost principle
C) revenue-recognition principle
D) matching principle
22) On December 31, 2012, Twisted Pretzel was told by an appraiser that its land, which cost $100,000, was worth $120,000. How should Twisted Pretzel show this information on its financial statements prepared under U.S. GAAP?
A) Report a gain of $20,000 on its income statement.
B) Report land at $100,000 on its income statement.
C) Report land at $120,000 on its income statement.
D) Continue showing the land at its cost of $100,000.
23) On December 31, 2012, Twisted Pretzel was told by an appraiser that its land, which cost $100,000, was worth $120,000. Under IFRS, Twisted Pretzel would be allowed to: show the land on its financial statements as ________.
A) an expense of $100,000 on the income statement
B) an expense of $120,000 on the balance sheet
C) an asset of $120,000 on the income statement
D) an asset of $120,000 on the balance sheet
24) For information to be useful, it must be relevant and reliable.
25) The owner of a sole proprietorship should not include personal financial records as part of the financial records and statements of the business.
26) The separate-entity concept means that a company and its owners should keep separate records.
27) Two characteristics of useful information are comparability and consistency.
28) Comparability means that companies should use the same accounting rules from period to period.
29) Reliable information can be verified.
30) If a company spends $25 on copy paper, the amount is not material compared with the total office supplies budget of $250,000.
31) Information that is relevant is both timely and useful in predicting the future.