Multiple choice

7) In a business decision where there are ethical concerns, the preferred course of action should be one that:

a) Is agreed upon by the most managers.

b) Maximizes the company's profits.

c) Results in maintaining operations at the current level.

d) Costs the least to implement.

e) Avoids casting doubt on the decision maker and upholds trust.

8) Which of the following accounting principles prescribes that a company record its expenses incurred to generate the revenue reported?

a) Going-concern assumption.

b) Expense recognition (Matching) principle.

c) Measurement (Cost) principle.

d) Business entity assumption.

e) Consideration assumption.

9) Cash investments by stockholders are listed on which of the following statement(s)?

a) Balance sheet.

b) Income statement.

c)Statement of retained earnings only.

d) Statement of cash flows only.

e) Statement of retained earnings and statement of cash flows.

10) Contessa Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the accounting equation are:

a) Total assets decrease and equity increases.

b) Both total assets and total liabilities decrease.

c) Total assets, total liabilities, and total equity are unchanged.

d) Both total assets and equity are unchanged and liabilities increase.

e) Total assets increase and equity decreases.