10. Increased discretion in accounting rules is always negative because it leads to more manipulation (T/F) (4pts)

11. LIFO liquidation will never result in a decrease net income (T/F) (4pts)
12. Double declining depreciation method is always preferred by the firms (T/F) (4pts)

13. Firms may impair either too little or too much because of uncertainty and estimation issues (T/F) (4pts)

14. What is the largest cost of being a public firm? (6pts)
    1. Litigation cost
    2. Political cost
    3. Regulatory cost
    4. Auditing cost
    5. Proprietary cost
15. Which combination of accounting items/ policies lead to the highest cash balance? (6pts)
    1. Accrued revenues, Accrued liabilities, FIFO, Straight-line depreciation
    2. Unearned revenues, Prepaid expenses, FIFO, Double-declining depreciation
    3. Accrued revenues, Prepaid expenses, LIFO, Straight-line depreciation
    4. Unearned revenues, Prepaid expenses, FIFO, Straight-line depreciation
    5. Unearned revenues, Accrued liabilities, LIFO, Double-declining depreciation
16. What is the effect overstated inventory on the financial statements? (6pts)
    1. Higher inventory, higher income, higher equity, higher cash flows
    2. Higher inventory, higher income, higher equity, no effect on cash flows
    3. Lower inventory, lower income, lower equity, no effect on cash flows
    4. Lower inventory, lower income, lower equity, lower cash flows
    5. Higher inventory, higher income, higher equity, lower cash flows