1. Which of the following will properly record the payment of a one-year insurance policy? Select one: A. Increase assets and increase retained earnings B. Increase liabilities and decrease retained earnings C. Increase and decrease assets D. Decrease assets and decrease liabilities

2. Which of the following statements istrueregarding the current ratio? Select one: A. A company with a high current ratio cannot have liquidity problems B. A low current ratio suggests inefficient use of resources C. The current ratio can be improved by paying creditors immediately prior to the preparation of financial statements D. The current ratio presents a more conservative liquidity measure than does the quick ratio

3. Which of the following is the justification of reporting certain assets at historical cost? Select one: A. Executory B. Reliability C. Relevance D. Accrual

4. Which of the following is one effect of a purchase of $500 of inventory on credit? Select one: A. It would increase liabilities by $500 B. It would decrease retained earnings by $500 C. It would decrease liabilities by $500 D. It would decrease cash asset $2500

5. The Cash t-account has a beginning balance of $32,000. During the year, $244,000 was debited and $249,000 was credited to the account. What is the ending balance of cash? Select one: A. ($5,000) B. $37,000 C. $27,000 D. Cannot be determined from the information given.