1 The objectivity principle of accounting:A.holds that the entity will remain in operation for the foreseeable future.B.enables accountants to ignore the effect of inflation in the accounting records.C. maintains that each organization or section of an organization stands apart from other organizations and individuals.D. ensures that accounting records and statements are based on the most reliable data available.
2 An Oklahoma City business paid $15,000 cash for equipment used in the business. At the time of purchase, the equipment had a list price of $20,000. When the balance sheet was prepared, the value of the equipment later rose to $22,000. What is the relevant measure of the value of the equipment?A.Historical cost, $15,000B.Fair market cost, $20,000 C.Current market cost, $22,000D.$15,000 on the day of purchase, $22,000 on balance sheet date
3 Dividends:A.are expenses.B.always affect net income.C.are distributions to stockholders of assets (usually cash) generated by net income.D.are distributions to stockholders of assets (usually cash) generated by a favorable balance in retained earnings.
4 Which of the following must be added to beginning Retained Earnings to compute ending Retained Earnings?A.Net income B.ExpensesC.Dividends D.All of these answers are correct.