1. Which of the following is an implication of the going concern assumption?

a. The historical cost principle is credible.

b. Depreciation and amortization policies are justifiable and appropriate.

c. The current-noncurrent classification of assets and liabilities is justifiable and significant.

d. All of these answers are correct.

2. Which of the following adjustments at the end of the year would require decreasing the liabilities reported on the statement of financial position?

a. A company uses $400 worth of supplies during the year.

b. A company records $400 worth of depreciation on equipment.

c. During the year, a company has earned $400 of revenue which was collected at the beginning of the year.

d. A company records $400 of wages for employees that will be paid next year.

3. Comprehensive income includes all of the following except

a. dividend revenue.

b. losses on disposal of assets.

c. investments by owners.

d. unrealized holding gains.

4. Which of the following events will appear in the cash flows from financing activities section of the

statement of cash flows?

a. Cash purchases of equipment.

b. Cash purchases of bonds issued by another company.

c. Cash received as repayment for lending funds.

d. Cash purchase of treasury stock.

5. Which of the following would not result in unearned revenue?

a. Rent collected in advance from tenants

b. Services performed on account

c. Sale of season tickets for football games at the beginning of the year

d. Sale of two-year magazine subscriptions