1. Which of the following is not an objective of financial reporting described in FASB Concepts Statement No. 1?

To provide information about how management of an enterprise has discharged its stewardship responsibility to owners.

To measure the current market value of the business enterprise.

To provide information so potential investors or creditors can make their own predictions of future earnings.

To focus primarily on information about earnings and its components.

2. The ethical concept of independence means that an accountant employed:

By a corporation cannot prepare financial statements for use by the company's bank.

By one company cannot work part-time for another company.

By an auditing firm cannot own any stock in the company being audited.

By one company cannot accept a job with another company in the same industry.

3. The balance sheet equation can be represented by:

A = L + OE

Assets - Liabilities = Owners' Equity

Net Assets = Owners' Equity

All of these

4. The Statement of Changes in Owners' Equity shows:

the change in cash during a year.

revenues, expenses, and liabilities for the period.

net income and dividends for the period.

paid-in capital and long-term debt at the end of the period.

5. Accrual accounting:

is designed to match revenues and expenses.

results in the balance sheet showing the fair market value of the entity's assets.

means that expenses are recorded when they are paid.

cannot result in the entity having net income unless cash is received from customers.

6. On January 31, an entity's balance sheet showed net assets of $1,025 and liabilities of $225 Owners' equity on January 31 was:

$ 800

$1,025

$1,250

$ 225

7. The principle of consistency means that:

the accounting methods used by an entity never change.

the same accounting methods are used by all firms in an industry.

the effect of any change in an accounting method will be disclosed in the financial statements or notes thereto.

there are no alternative methods of accounting for the same transaction.