Which accounting principle or concept specifically states that we should record transactions at the amount that can be verified? Answer a. Going-concern concept b. Entity concept c. Cost principle d. Reliability principle Question 2 The balance sheet reports Answer a. Results of operations for a specific period b. Financial position on a specific date c. Results of operations on a specific period d. Financial position for a specific period Question 3 Assume that Fossil sold watches to a department store on account for $43,000. How would this transaction affect Fossil's accounting equation? Answer a. Increase both liabilities and equity by $43,000 b. Increase both assets and liabilities by $43,000 c. Increase both assets and equity by $43,000 d. No effect on the accounting equation because the effects cancel out Question 4 Which type of business organization is owned by stockholders? Answer a. Corporation b. Partnership c. Proprietorship d. All of the above are owned by stockholders Question 5 Assume that Fossil paid expenses totaling $40,000. How does this transaction affect Fossils accounting equation? Answer a. Increases assets and decreases liabilities b. Decreases assets and increases liabilities c. Decreases both assets and equity d. Increases both assets and equity Question 6 Fossil is famous for fashion wristwatches and leather goods. At the end of the recent, year, Fossil's assets added up to $345 million, and owner's equity was $240 million. How much were Fossil's liabilities? Answer a. Cannot be determined from the data given b. $345 million c. $105 million d. $240 million Question 7 What are revenues and expenses? Answer a. Revenues are decreases in capital from delivering goods or services to customers and expenses are increases in earnings from the result of operations. b. Revenues are increases in capital from delivering goods or services to customers and expenses are decreases in earnings from the result of operations. c. Revenues are decreases in capital from delivering goods or services to customers and expenses are decreases in earnings from the result of operations. d. Revenues are increases in capital from delivering goods or services to customers and expenses are increases in earnings from the result of operations. Question 8 Generally accepted accounting principles (GAAP) are formulated by the Answer a. Securities and Exchange Commission (SEC) b. Institute of Management Accountants (IMA) c. Financial Accounting Standards Board (FASB) d. American Institute of Certified Public Accountants (AICPA) Question 9 The income statement reports Answer a. Financial position on a specific date b. Results of operations on a specific date c. Results of operations for a specific period d. Financial position for a specific period Question 10 Consider the overall effects of Fossil of selling watches on account for $53,000 and paying expenses totaling $37,000. What is Fossils net income or net loss? Answer a. Net loss of $16,000 b. Net income of $16,000 c. Net income of $53,000 d. Cannot determine from the data given