Which of the following is not a step in the accounting process? Identification. Verification. Recording. Communication. 2. Which of the following statements about users of accounting information is incorrect? Management is an internal user. Taxing authorities are external users. Present Creditors are external users. Regulatory authorities are internal users. 3. The historical cost Principle states that: assets should be initially recorded cost and adjusted when the fair value changes. activities of an entity are to be kept separate and distinct from its owner. assets should be recorded at their cost. only transaction date capable of being expressed in terms of money be included in the accounting records. 4. Which of the following statements about basic assumptions is correct? Basic assumptions are the same as accounting principles. The economic entity assumption states that there should be a particular unit of accountability. The monetary unit of accounting to measure employee morale. Partnerships are not economic entities. 5. The three types of business entities are: proprietorships, small business, and partnerships. proprietorships, partnerships and corporations. financial, manufacturing, and service companies. 6. Net income will result during a time period when: assets exceed liabilities. assets exceed revenues. expenses exceed revenues. revenues exceed expenses. 7. As a December 31, 2015, Reed Company has assets of dollar 3, 500 and stockholders' equity of dollar 1, 500. What are the liabilities for Reed Company as of December 31, 2015? dollar 1, 500. dollar 1,000 dollar 2, 500 dollar 2,000. 8. Performing services on account with have the following effects on the components of the basic accounting equation: increase assets and decrease stockholders' equity. increase assets and increase stockholders' equity. increase assets and increase liabilities. increase liabilities and increase stockholders' equity. 9. Which of the following events is not recorded in the accounting records? Equipment is purchased on account. An employee is terminated. A cash investments is made into the business. The company pays a cash dividend. 10. During 2015, Seisor Company's assets decreased dollar 50,000 and its liabilities decreased dollar 90,000. Its stockholders' equity therefore: increased dollar 40,000 decreased dollar 140,000 decreased dollar 40,000 increased dollar 140,000 11. Payment of an account payable affects the components of the accounting equation in the following way