1) The ________ requires that expenses incurred in producing revenues be deducted from the revenue they generated during the same accounting period.

A) principle of prudence

B) deferral principle

C) materiality principle

D) matching principle

E) principle of continuity

.

2) ________ is an accounting method in which revenue is recorded when a sale is made, and an expense is recorded when the company uses an asset to produce revenue.

A) Accrual basis

B) Cash basis

C) Profit basis

D) Depreciation

E) Deferral basis

3) ________ is an accounting procedure for systematically spreading the cost of a tangible asset over its estimated useful life.

A) Profit basis

B) Accrual basis

C) Cash basis

D) Depreciation

E) Deferral basis

4) Which of the following is an example of a current asset?

A) Accounts receivable

B) Goodwill

C) Land

D) Equipment

E) Intellectual property

5) Which of the following is a major difference between debt financing and equity financing?

A) Equity financing has a specific maturity period, whereas debt financing usually has no specific maturity period.

B) Repayment of debt financing is not linked to organizational performance, unlike equity financing.

C) Equity holders have primary claims on assets unlike debt financiers.

D) Payments to equity holders reduce taxable income, whereas debt payments are not tax deductible.

E) Debt financing is used to cover long-term expenses, whereas equity financing is used for current expenses.