Question 1: A company purchases a 1-year insurance policy on March 1. The accountant records a decrease in cash and an increase in expense of $2,944. Which of the following is TRUE based on the information provided?

a) Faithful - violated

b) Comparable - followed

c) Verifiable - violated

d) Understandable - followed

e) Timely - violated

Question 2: YYZ has incurred 3 consecutive years of significant losses, and has a large payable due in the next 12 months which they don't expect to have the cash to pay. The president of the company does not address these losses in the published financial statements. Which of the following, given the information provided, is true?

a) Units of measure - violated

b) Time period (Periodicity) - violated

c) Separate entity - violated

d) Historical cost - violated

e) Going concern - violated

Question 3: Which of the following stakeholders use accounting information to determine whether they should extend credit to a company?

a) Regulatory agencies

b) Labour unions

c) Shareholders

d) Customers

e) Suppliers