Multiple Choice Questions
1. The private board that currently has the authority to establish generally accepted accounting principles is the:
A) APB.
B) FASB.
C) AAA.
D) AICPA.
E) SEC.
2. The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the:
A) Accounting equation.
B) Cost principle.
C) Going-concern principle.
D) Realization principle.
E) Business entity principle.
3. Generally accepted accounting principles:
A) Are based on long used accounting practices.
B) Are basic assumptions concepts and guidelines for preparing financial statements.
C) Are detailed rules used in reporting on business transactions and events.
D) Arise from the rulings of authoritative bodies.
E) All of the above.
4. The objectivity principle:
A) Means that information is supported by independent, unbiased evidence.
B) Means that information can be based on what the preparer thinks is true.
C) Means that financial statements should contain information that is optimistic.
D) Means that a business may not reorganize revenue until cash is received.
E) All of the above.
5. The rule that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of assets associated with revenue to be in a form other than cash, and (3) measures the amount of revenue as the cash plus the cash equivalent value of any noncash assets received from customers in exchange for goods or services, is called the:

A) Going-concern principle.
B) Cost principle.
C) Revenue recognition principle.
D) Objectivity principle.
E) Business entity principle
6. Marian Mosely is the owner of Mosely Accounting Services. Which accounting principle requires Marian to keep her personal financial information separate from the financial information of Mosely Accounting Services?
A) Monetary unit principle
B) Going-concern principle
C) Cost principle
D) Business entity principle
E) None of these. Since Marian is a sole proprietor, she is not required to separate her personal financial information from the financial information of Mosely Accounting Services.
7. Which of the following accounting principles would require that all goods and services purchased be recorded at cost?
A) Going-concern principle.
B) Continuing-concern principle.
C) Cost principle.
D) Business entity principle.
E) Consideration principle.
8. The accounting process begins with:
A) Analysis of business transactions and events.
B) Preparing financial statements and other reports.
C) Summarizing the recorded effect of business transactions.
D) Presentation of financial information to decision-makers.
E) Preparation of the trial balance.
9. Source documents include all of the following except:
A) Sales tickets.
B) Ledgers.
C) Checks.
D) Purchase orders.
E) Bank statements.
10. A record of the increases and decreases in a specific asset, liability, equity, revenue, or expense is a(n):
A) Journal.
B) Posting.
C) Trial balance.
D) Account.
E) Chart of accounts.