Question :
41. Accounting information that capable of making a difference in a : 1197592
41. Accounting information that is capable of making a difference in a decision by the user of the report is
A. comparable.
B. reliable.
C. relevant.
D. neutral.
42. The Cervantes Company uses the same method of depreciation for its equipment in each fiscal period. This practice is an example of
A. conservatism.
B. consistency.
C. materiality.
D. matching.
43. The four assumptions financial statement users should be able to assume that preparers of the statements have made in preparing the statements that are listed by the FASB’s conceptual framework are
A. separate economic entity, going concern, monetary unit, and periodicity of income.
B. conservatism, matching principle, revenue recognition principle, and periodicity of income.
C. conservatism, cost-benefit test, full disclosure principal, and industry practice constraint.
D. historical cost basis, materiality realization, and transparency.
44. Keeping the personal assets of the owner of a business separate from the assets of the firm is an example of
A. following the going concern assumption.
B. applying the realization principle.
C. following the separate entity assumption.
D. applying the conservatism convention.
45. When Tamar Snyder opened a shoe store, her accountant did not include the cash in her personal savings account as one of the assets of the business. This is an example of
A. the separate entity assumption.
B. the conservatism principle.
C. the materiality principle.
D. industry practice principle.
46. Which of the following is allowed under generally accepted accounting principles?
A. A company was offered $60,000 for land that it had purchased for $15,000. The company did not sell the land but increased the Land account to $60,000.
B. An owner lists the full cost of his or her personal automobile, which is occasionally used for business purposes, on the company’s balance sheet.
C. A large company recorded the $20 cost of a tool as an expense, although the item is expected to be used for 3 years.
D. The Equipment account shows a balance of $55,000. This amount represents the original cost of $75,000 less the accumulated depreciation of $20,000.
47. Recording land at its cost rather than its appraisal value illustrates
A. the full disclosure principle.
B. the cost basis principle.
C. the realization principle.
D. the matching principle.
48. An accountant who records revenue when a credit sale is made rather than waiting for the receipt of cash from the customer is
A. following the accrual principle.
B. following the conservatism convention.
C. violating generally accepted accounting principles.
D. following the consistency principle.
49. Depreciating equipment over its useful life is an example of
A. following the objectivity assumption.
B. applying the matching principle.
C. applying the realization principle.
D. applying the conservatism convention.
50. The financial statements in the annual report of a corporation contain footnotes explaining the methods used to depreciate the firm’s equipment. This practice is an example of
A. the consistency principle.
B. the conservatism principle.
C. the full disclosure principle.
D. the accrual principle.
