Question : 71. The principle prescribing that financial statements reflect the assumption that : 1256351

 

 

71. The principle prescribing that financial statements reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the: 

A. Going-concern principle

B. Business entity principle

C. Objectivity principle

D. Cost principle

E. Monetary unit principle

 

 

72. A parcel of land is: offered for sale at $150,000, assessed for tax purposes at $95,000, recognized by its purchasers as being worth $140,000, and purchased for $137,000. The land should be recorded in the purchaser’s books at: 

A. $95,000

B. $137,000

C. $138,500

D. $140,000

E. $150,000

 

 

73. To include the personal assets and transactions of a business’s owner in the records and reports of the business would be in conflict with the: 

A. Objectivity principle

B. Realization principle

C. Business entity principle

D. Going-concern principle

E. Revenue recognition principle

 

 

74. The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the amount of cash or cash equivalent given in exchange is the: 

A. Accounting equation

B. Cost principle

C. Going-concern principle

D. Realization principle

E. Business entity principle

 

 

75. Recording the items on the financial statements in dollars is done because of the: 

A. Objectivity principle

B. Monetary unit principle

C. Revenue recognition principle

D. Going-concern principle

E. Cost principle

 

 

 

76. The objectivity principle: 

A. Means that information is supported by independent, unbiased evidence.

B. Means that information can be based on what the preparer thinks is true.

C. Means that financial statement should contain information that is optimistic.

D. Means that a business may not recognize revenue until cash is received.

E. Means the assets acquired must be recorded at what the company paid for them.

 

 

77. The principle that (A) requires revenue to be recognized at the time it is earned, (B) allows the inflow of assets associated with revenue to be in a form other than cash, and (C) measures the amount of revenue as the cash plus the cash equivalent value of any noncash assets received from customers in exchange for goods or services is called the: 

A. Going-concern principle

B. Cost principle

C. Revenue recognition principle

D. Objectivity principle

E. Business entity principle

 

 

78. The question of when revenue should be recognized on the income statement (according to GAAP) is addressed by the: 

A. Revenue recognition principle

B. Going-concern principle

C. Objectivity principle

D. Business entity principle

E. Cost principle

 

 

79. The International Accounting Standards Board (IASB) 

A. Hopes to create harmony among accounting practices of different countries.

B. Is the government group that establishes reporting requirements for companies that issue stock to the public.

C. Has the authority to impose its standards on companies

D. Is the only source of U.S. generally accepted accounting principles (GAAP).

E. Applies only to companies that are members of the European Union.

 

 

80. The Maximum Experience Company acquired a building for $500,000. Maximum Experience had an appraisal done and found that the building was worth $575,000. The seller had paid $300,000 for the building six years ago. Which accounting principle would prescribe that Maximum Experience record the building on its records at $500,000? 

A. Monetary unit principle

B. Going-concern principle

C. Cost principle

D. Business entity principle

E. Revenue recognition principle