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Principles of Finance

Multiple Choice

Principles of FinanceMultiple Choice
1 .
Which method of accounting must be used by publicly traded companies?
  1. cash basis
  2. accrual basis
  3. a hybrid of cash and accrual basis
  4. modified accelerated basis
2 .
Which two accounting principles directly support the accrual method of accounting?
  1. periodicity, transparency
  2. historical cost, time period
  3. conservativism, going concern
  4. expense recognition, revenue recognition
3 .
Which of the following account types has a normal debit balance?
  1. cash
  2. notes payable
  3. wages payable
  4. revenue
4 .
Sara sells $100 worth of inventory to her client on credit on January 15. She delivers the inventory to the client on January 20. The client pays for the inventory of February 26. On what date should Sara recognize the revenue from the sale?
  1. January 15
  2. January 20
  3. January 31
  4. February 26
5 .
How is the book value of a fixed asset calculated?
  1. original cost less accumulated depreciation
  2. original cost divided by useful life
  3. market value less depreciation expense
  4. depreciable base less market value
6 .
Which of the following balance sheet item is classified as a fixed asset?
  1. inventory
  2. goodwill
  3. equipment
  4. accounts receivable
7 .
What is the formula to determine net income or net loss?
  1. revenues less expenses
  2. cash less expenses
  3. revenues plus cash
  4. revenues divided by expenses
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