31.Which one of the following reflects the proper inventory valuation on a company’s balance sheet? a. Lower of original cost or face value b. Net realizable value c. Lower of cost or market ...

31.Which one of the following reflects the proper inventory valuation on a company’s balance sheet?

a. Lower of original cost or face value

b. Net realizable value

c. Lower of cost or market

d. Expected selling price

32.Which one of the following is violated when a company records cost of goods sold expense at the time when inventory is purchased?

a. Relevance

b. Historical cost

c. Matching

d. Revenue recognition criteria

33.Which one of the following is violated when a firm reports its long-term debt at the present value of the cash flows associated with that debt?

a. Matching

b. No violations occurred. This accounting is correct.

c. Revenue recognition

d. Gross value of the debt

34.A business entity operates in two general markets. They are:

a. a producer and a consumer market.

b. an economic and a fiscal market.

c. an input and an output market.

d. a profit and a non-profit market.

35.Which one of the following is violated when a sole proprietor records its magazine stand at the present value of the cash flows expected to be earned from the sale of magazine over the expected life of the stand?

a. Original cost

b. Fair market value

c. Going concern

d. Revenue recognition

36.Which one of the following is violated when a company pays for its CEO’s personal groceries using the company’s bank account?

a. Stable dollar

b. Economic entity

c. Going concern

d. Ethical principle of accounting

37.Why must measures of performance and financial position be available on a timely basis?

a.For the users of the financial information to make decisions

b.For the SEC to determine whether the company should be shut down or not

c.FASB requires this information to be submitted to them for approval

d.For management to have time to manipulate income

38.The fiscal period assumption states that the operating life of an economic entity:

1. 
   is generally for a period of one year.
   


2. 
   can be any period management decides it to be.
   


3. 
   must be an entity separately distinct from its owners.
   


4. 
   can be divided into time periods over which measures can be developed and applied.
   

39.As fiscal periods become shorter, the application of certain accounting methods become:

a.more arbitrary and subjective.

b.more objective.

c.more accurate.

d.more conservative.

40.The stable dollar assumption assumes that:

1. 
   the monetary unit is the functional currency of any country in which a company operates.
   


2. 
   inflationary effects should be recognized in the financial statements
   


3. 
   economic wealth is not measurable.
   


4. 
   the monetary unit is stable across time.