1.) The difference between a loss and an expense is best described as

a. The likelihood with which the transaction will recure in the future.

b. An expense is a reduction of net assets, while a loss is a reduction of assets.

c. An expense is a nominal account while a loss is a real account.

e. None of the above.

2.) Changes in accounting principle represent changes in how a company has recorded certain transactions (e.g. changing from FIFO to LIFO cost assumptions). Accordingly, the FASB requires companies to alter past financial statements to recast relevant accounts using the new principle. This is in-line with which characteristics of accounting information?

a. Consistency

b. Comparability

c. Verifiability

d. Faithful Representation