The following are advantages of historical cost accounting, except:

Historical costs show the value exchanged at the time of acquisition

Historical costs are straight forward and reliable

Historical cost gives no indication of the current values of assets

Historical cost is objective and measurable

What is the primary difference between historical cost accounting and fair value?

Historical cost uses the cash basis

Fair value uses the cash basis

Depreciation is only recorded for fair value

Depreciation is only recorded for historical cost

A significant variance between the price paid for real estate and its current selling price would be visible under which method of accounting?

Historical Cost

Accrual

Cash Basis

Fair Value

A 5 year lease has rental payments that increase 10% per year. Recording revenue at equal installments under the straight line method results in:

Less revenue than cash in year 1

More revenue than cash in year 1

Less revenue over the life of the lease

More revenue over the life of the lease

A lease requires rental payments of $50,000 in year 1 and $100,000 in year 2. What is the straight line rent amount each year?

$50,000

$100,000

$150,000

$75,000

If ABC Company has $2M in assets and $1.5M in liabilities, what is total equity?

$1.5 Million

$0.5 Million

$2.0 Million

$3.5 Million