____ 1. Financial statements combining the operations of Sears, Canadian Tire, and Shoppers Drug Mart would violate the

a. monetary unit assumption.

b. economic entity assumption.

c. cost principle.

d. both a and c above.

___ 2. To be relevant, accounting information must

a. improve the company's internal control.

b. be presented on the balance sheet.

c. be recorded at historical cost.

d. be capable of making a difference in a decision.

_____ 3. The matching principle states that

a. revenues should be matched with assets when they are recorded.

b. revenues should be matched with the periods when cash is collected from customers.

c. recorded values of assets should match their purchase prices.

d. none of the above.

____ 4. In accounting, conservatism means

a. choose the solution that will understate assets or income.

b. choose the solution that will be least likely to overstate assets or income.

c. choose the solution that will reduce expenses, thereby increasing income.

d. voting Reform.

d. Income in a partnership is always divided equally among all partners.

____ 5. Mutual agency means that

a. assets of the partnership are owned jointly by all partners.

b. the partnership must carry life insurance.

c. partners share income equally.

d. any partner can create a binding contract for the partnership.

____ 6. Unlimited liability

a. is a concept that explains how assets will be divided in the event of a partner's death.

b. exists for general partners.

c. may be eliminated for all partners.

d. means that the partnership agreement places no limit on the amount of money the partnership can borrow.

____ 7. When the assets of a partnership are sold to liquidate a partnership, the cash received is

a. divided among the partners based upon their income-sharing ratios.

b. divided among the partners in proportion to their loss-sharing ratios.

c. used to pay partnership creditors after partners have recovered all of their capital.

d. none of the above.

_____ 8. Herman had a capital deficiency of $20,000 and Edwards had a credit balance of $150,000 in his capital account before the entry to record final distribution of cash to partners. When the final distribution of cash is made, the amount of cash Edwards should receive is

a. $65,000.

b. $75,000.

c. $110,000.

d. $130,000.

____ 9. Wilma, Sanjeev, and Soo formed a partnership with income-sharing ratios of 50%, 30%, and 20%, respectively. Cash of $120,000 was available after the partnership's assets were liquidated. Prior to the final distribution of cash, Wilma's capital balance was $80,000, Sanjeev's capital balance was $60,000, and Soo had a capital deficiency of $20,000. Wilma should receive how much of the $120,000 cash?

a. $70,000.

b. $67,500.

c. $52,500.

d. $80,000.

____ 10. Discontinued operations appear in the income statement between

a. extraordinary items and the cumulative effect of changes in accounting principle.

b. the cumulative effect of changes in accounting principle and net income.

c. gross profit and income tax expense.

d. none of the above.