8) The process of reporting an economic event in the financial statements is known as
A) recording
B) writing
C) recognition
D) transcribing
9) Shadow's Cleaning Service provides weekly cleaning services for $41 per week. In January, they collected
payments from 60 customers for 3 months (12 weeks) of service each. For the month of January, they will
recognize
A) $2,460; $720
B) $3,180; $0
C) $9,840; $29,520
D) $29,520; $9,840
of revenue under the cash basis, and ______ under the accrual basis.
41
10) If a company is facing a bankruptcy from which it is quite doubtful that the firm may ever recover, which
underlying assumption would not be valid?
A) periodicity assumption
B) economic entity concept
C) monetary unit assumption
D) going concern concept
11) Which underlying assumption presumes that the owner's personal residence should not be included as an
asset on the company balance sheet?
A) monetary unit assumption
B) periodicity assumption
C) economic entity concept
D) common sense assumption
12) Which attribute of a fundamental characteristic makes explicit the assumption of the full disclosure
principle?
A) relevance
B) materiality
C) verifiability
D) completeness
13) The process by which an accountant reaches a decision in situations with multiple alternatives is referred to
as
A) earnings management
B) GAAP
C) judgment
D) financial reporting
14) ______ occurs when managers manipulate financial information and misrepresent the firm's financial
position and performance.
A) Earnings management
B) GAAP
C) Judgment
D) Decision-making
