A- Multiple Choice Questions (15 marks) Answer ALL questions from this section. Choose the best possible answer (3 marks each). 1. Creditors use financial accounting information to A) evaluate the risks of lending money. B) determine whether the company is following regulatory guidelines. C) determine whether the company is complying with tax laws. D) make decisions to about buying, holding, or selling shares. 2. The calculation of depreciation using the declining balance method A) yields an increasing depreciation expense each period. B) multiplies a declining percentage times a constant book value. C) multiplies a constant percentage times the previous year's depreciation expense. D) ignores salvage value in determining the amount to which a constant rate is applied. 3. Identify the statement below that is incorrect. A) The normal balance of accounts receivable is a debit. B) The normal balance of unearned revenues is a credit. C) The normal balance of an expense account is a credit. D) The normal balance of the share capital account is a credit. 4. Shareholder equity is made up of which of the following two components? A) Liabilities and Equity. B) Assets and Equity. C) Retained Earnings and Liabilities. D) Share Capital and Retained Earnings. 5. If a capital expenditure is mistakenly recorded as a revenue expenditure, the effect is to A) understate profit, shareholders' equity, and assets. B) overstate profit and shareholders' equity and understate assets. C) understate profit and shareholders' equity and overstate assets. D) None of the above