Learning Objective 2-2
1) A financial statement provides information that ________.
A) is specific to a business enterprise
B) is industry-wide information
C) is economy-wide information
D) includes the owner's personal financial records
2) Characteristics of useful information include ________.
A) rationality and reliability
B) comparability and consistency
C) materiality and conservatism
D) comprehensive and complete
3) Relevant information ________.
A) needs to be current so it can be used to make decisions
B) can be verified as accurate and truthful
C) allows users to make comparisons across financial statements
D) is presented the same way period after period
4) Comparable information ________.
A) needs to be current so it can be used to make decisions
B) can be verified as accurate and truthful
C) allows users to make comparisons across financial statements
D) is presented the same way period after period
5) Reliable information ________.
A) needs to be current so it can be used to make decisions
B) can be verified as accurate and truthful
C) allows users to make comparisons across financial statements
D) is presented the same way period after period
6) Consistent information ________.
A) needs to be current so it can be used to make decisions
B) can be verified as accurate and truthful
C) allows users to make comparisons across financial statements
D) is presented the same way period after period
7) Assets are recorded at their original cost to the company at the time of purchase. This is the ________ principle.
A) historical-cost
B) full-disclosure
C) matching
D) revenue recognition
8) Expenses are reported on the income statement when the related revenue is recognized. This is the ________ principle.
A) historical-cost
B) full-disclosure
C) matching
D) revenue recognition
9) Ace Electronics bought a new factory for $5,000,000. The factory was originally offered for sale for $5,200,000, but Ace successfully negotiated a lower price. Acme, Inc. was also trying to buy the factory and offered to pay $4,900,000. Ace should record the factory on its books at ________.
A) $5,200,000
B) $5,000,000
C) $4,500,000
D) $4,900,000
10) For June, Team Shirts had a beginning balance in its Retained earnings account of $500. Net income for the month was $875. Team Shirts paid dividends of $200. The ending balance in Retained earnings was ________.
A) $675
B) $1,575
C) $1,175
D) $1,375