Accountants refer to an economic event that affects a company's financial statements as a

Accountants refer to an economic event that affects a company's financial statements as a

purchase event.

transaction.

sale event.

recording event.

The historical cost principle states that

only transaction data capable of being expressed in terms of money be included in the accounting records.

assets should be recorded at their cost.

assets should be initially recorded at cost and adjusted when the fair value changes.

activities of an entity are to be kept separate and distinct from its owner.

Generally Accepted Accounting Principles are

theories that are based on physical laws of the universe.

standards that indicate how to report economic events.

principles that have been proven correct by academic researchers.

income tax regulations of the Internal Revenue Service.

The BASE Company has assets, other than investment securities, that cost $50 million. The current market value of the assets is $75 million. The assets will be recorded and reported as assets at 

$50 million.

25 million.

$125 million.

$75 million.

The primary accounting standard-setting body in the United States is the 

international accounting standards board.

internal revenue service.

financial accounting standards board.

securities and exchange commission.

Which of the following statements about basic assumptions is correct?

The economic entity assumption states that there should be a particular unit of accountability.

Basic assumptions are the same as accounting principles.

The monetary unit assumption enables accounting to measure employee morale.

Partnerships are not economic entities.

The three types of business entities are

financial, manufacturing, and service companies.

proprietorships, small businesses, and partnerships.

proprietorships, partnerships, and corporations.

proprietorships, partnerships, and large businesses.

A basic accounting assumption assumes that for U.S. companies, the dollar is

useless in measuring an economic event.

the common unit of measure for all business transactions.

unrelated to business transactions.

an excellent measure of economic activities.

Combining the activities of Kellogg and General Mills would violate the 

economic entity assumption.

ethics principle.

cost principle.

monetary unit assumption.

Liabilities of a company would not include

notes payable.

accounts payable.

wages payable.

accounts receivable.

The resources a business owns are called

assets.

revenues.

stockholders’ equity.

liabilities.

Which of the following events is not recorded in the accounting records?

A cash investment is made into the business.

The declaration of cash dividends.

An employee is terminated.

Equipment is purchased on account.

Net income will result during a time period when

assets exceed revenues.

revenues exceed expenses.

assets exceed liabilities.

expenses exceed revenues.

The financial statement that reports assets, liabilities, and stockholders’ equity is the

statement of stockholders’ equity.

balance sheet.

statement of cash flow.

income statement.

Which of the following financial statements is prepared as of a specific date?

Statement of Cash Flows.

Balance Sheet.

Income Statement.

Retained Earnings Statement.