THEORY QUESTIONS 1. The primary private sector agency that oversees external financial reporting standards is the: A Financial Accounting Standards Board. B Federal Bureau of Investigation. C General Accounting Office. D Internal Revenue Service. 2. Which of the following equations properly represents a derivation of the fundamental accounting equation? A Assets + liabilities-owner's equity. B Assets owner's equity. C Cash assets. D Assets-liabilities owner's equity. 3. Wilson Company owns land that cost $100,000. If a "quick sale" of the land was necessary to generate cash, the company feels it would receive only $80,000. The company continues to report the asset on the balance sheet at $100,000. Which of the following concepts justifies this? A The historical-cost principle. B The value is tied to objective and verifiable past transactions. C Neither of the above. D Both "a" and "b". 4. Retained earnings will change over time because of several factors. Which of the following factors would explain an increase in retained earnings? A Net loss. B Net income. C Dividends. D Investments by stockholders.