I) Earnings are used as a proxy for:

a) Future net income

b) Future cash flows

c) Current liabilities

d) Gross Revenues

II) One difference between a cost and an expense is simply the timing in which the consumption of the resource is recognized. (True or False)

a) True

b) False

III) Integrating the concepts of accrual basis accounting and the matching principle, suppose a manufacturer ordered and paid for six months of cleaning supplies on the last day of the accounting period. Would this be a cost or expense when that period's financials are published? (assuming the products have not yet been delivered and the company's policy is to make them inventoriable).

a) Cost

b) Expense

IV) Which of the following statements is true?

a) Sales that are on credit increase receivables

b) When an account is written off, both gross receivables and the allowance for bad debt decrease.

c) Accounts receivable is reported net of allowance for doubtful accounts

d) All of the above