Select the best answer for each of the following and write the letter corresponding to your answer in the answer sheet provided.

1. Documents that comprise GAAP include all of the following, except

a. FASB implementation guides.

b. AICPA accounting research bulletins.

c. APB Opinions.

d. Statements of financial accounting concepts.

2. The Emerging Issues Task Force

a. Provides interpretation of FASB issued standards.

b. Provides a consensus on how to account for new and unusual financial transactions.

c. Provides guidance on widely recognized and prevalent industry practices.

d. Provides assistance to the SEC in enforcing select issues.

3. Which of the following best illustrates the accounting concept of conservatism?

a. Use of the allowance method to recognize bad debt losses from credit sales

b. Use of the lower of cost or market approach in valuing inventories.

c. Use of the same accounting method from one period to the next in computing depreciation expense

d. Utilization of a policy of deliberate understatement of asset values in order to present a conservative net income figure

4. Which of the following statements about materiality is not correct?

a. An item must make a difference or it need not be disclosed.

b. Materiality is a matter of relative size or importance.

c. An item is material if its inclusion or omission would influence or change the judgment of a reasonable person.

d. All of these are correct statements about materiality.

5. A&E Corporation paid one year