Answer True or False

1. Recognition is the process of formally recording or incorporating an item into the financial statements.
2. When initially recording the cost of land purchased, most companies use the current value.
3. Under the accrual method expenses are recognized when revenue is earned.
4. Most companies use the cash basis of accounting.
5. Three months before year end Billings Company signed a $100,000 12%, 6- month note. Principal and interest will be paid at maturity. No interest should be accrued at year-end because the company has no obligation to pay the interest until the note matures.