1. An Allowance for Doubtful Debts is created:

1. Debtors become bankrupt.
2. When debtors cease to be in business.
3. To provide for possible bad debts.
4. To write-off bad debts.

2. Identify the appropriate qualitative characteristic(s) being described in the statements below.Items whose amounts are very small relative to other amounts on the financial statements may be accounted for in the most expedient manner, rather than requiring strict accounting treatment under GAAP.

1. Materiality
2. Comparability (consistency)
3. Neutrality
4. Relevance

3. Identify the appropriate qualitative characteristic(s) being described in the statements below.Information that is capable of making a difference in a decision is said to have this fundamental quality.

1. Faithful representation
2. Comparability
3. Materiality
4. Relevance

4. The historical cost principle provides that:
   1. Items whose costs are insignificant compared to other amounts on the financial statements may be accounted for in the most expedient manner.
   2. Assets and equities be expressed in terms of a common denominator.
   3. The recorded amount of an acquired item should be the fair market value of the item.
   4. The expenses of generating revenue should be recognized in the same period that the related revenue is recognized.

5. Determine the total expenses based on the following data:

Assets RM72,000.00

Capital RM70,000.00

Revenue RM20,000.00

Liabilities RM16,000.00

1. RM138,000.
2. RM34,000.
3. RM106,000.
4. RM38,000.