Question : 51. Which of the following not a generally accepted accounting principle : 1229560

51. Which of the following is not a generally accepted accounting principle relating to the valuation of assets? 
A. The cost principle – in general, assets are valued at cost, rather than at estimated market values.
B. The objectivity principle – accountants prefer to use objective, rather than subjective, information as the basis for accounting information.
C. The safety principle – assets are valued at no more than the value for which they are insured.
D. The going-concern assumption – one reason for valuing assets such as buildings and equipment at cost rather than at their current market values is the assumption that the business will use these assets rather than sell them.

52. Each year, the accountant for Southern Real Estate Company adjusts the recorded value of each asset to its market value. Using these market value figures on the balance sheet violates: 
A. The accounting equation.
B. The stable-dollar assumption.
C. The business entity concept.
D. The cost principle.

53. The owner of Westhampton Fish Eatery purchased a new car for his daughter who is away at college at a cost of $43,000 and reported this amount as Delivery Vehicle in the restaurant’s balance sheet. The reporting of this item in this manner violated the: 
A. Cost principle.
B. Business entity concept.
C. Objectivity principle.
D. Going-concern assumption.

54. Which of the following is correct when a corporation uses cash to pay for an expense? 
A. Total assets will decrease.
B. Retained earnings will decrease.
C. Owners’ equity will decrease.
D. All three of the above statements are correct.

55. If cash flows from operating activities is a negative amount: 
A. The company must have a net loss for the year.
B. The company must have a net profit for the year.
C. The company must have paid off more debts than it earned during the year.
D. The company may have net income or a net loss for the year.

56. Eton Corporation purchased land in 1990 for $190,000. In 2008, it purchased a nearly identical parcel of land for $430,000. In its 2008 balance sheet, Eton valued these two parcels of land at a combined value of $860,000. Reporting the land in this manner violated the: 
A. Cost principle.
B. Principle of the business entity.
C. Objectivity principle.
D. Going-concern assumption.

57. Bob Bertolucci, owner of Bob’s Bazaar, also owns a personal residence that costs $575,000. The market value of his residence is $725,000. During preparation of the financial statements for Bob’s Bazaar, the accounting principle most relevant to the presentation of Bob’s home is: 
A. The concept of the business entity.
B. The cost principle.
C. The going-concern assumption.
D. The objectivity principle.

58. Which of the following will not cause a change in the owners’ equity of a business? 
A. Payment of an interest free business debt.
B. Withdrawal of cash by the owner.
C. Sale of land at a profit.
D. Losses from unprofitable operations.

59. Which business organization is recognized as a separate legal entity under the law? 
A. Corporation.
B. Sole proprietorship.
C. Partnership.
D. All business organizations are separate legal entities.

60. The amount of owners’ equity in a business is not affected by: 
A. The percentage of total assets held in cash.
B. Investments made in the business by the owner.
C. The profitability of the business.
D. The amount of dividends paid to stockholders.