99. The International Accounting Standards Board (IASB) A. Hopes to create harmony among accounting practices of different countries. B. Is the government group that establishes reporting requirements for companies that issue stock to the public. C. Has the authority to impose its standards on companies. D. Is the only source of generally accepted accounting principles (GAAP). E. Only applies to companies that are members of the European Union. 102. The Maxim Company acquired a building for $500 000. Maxim had the building appraised and found that the building was easily worth $ 575 000. The seller had paid $300 000 for the building 6 years ago. Which accounting principle would require Maxim to record the building on its records at $500 000? A. Monetary unit assumption. B. Going-concern assumption. C. Cost principle. D. Business entity assumption. E. Revenue recognition principle. 1-16 Chapter 01 – Accounting in Business 103. On December 15 of the current year Myers Legal Services signed a $50 000 contract with a client to provide legal services to the client in the following year. Which accounting principle would require Myers Legal Services to record the legal fees revenue in the following year and not the year the cash was received? A. Monetary unit assumption. B. Going-concern assumption. C. Cost principle. D. Business entity assumption. E. Revenue recognition principle. 104. Marian Mosely is the owner of Mosely Accounting Services. Which accounting principle requires Marian to keep her personal financial information separate from the financial information of Mosely Accounting Services? A. Monetary unit assumption. B. Going-concern assumption. C. Cost principle. D. Business entity assumption. E. Matching principle. 105. A limited partnership: A. Includes a general partner with unlimited liability. B. Is subject to double taxation. C. Has owners called stockholders. D. Is the same as a corporation. E. May only have two partners. 106. A partnership: A. Is also called a sole proprietorship. B. Has unlimited liability for its partners. C. Has to have a written agreement in order to be legal. D. Is a legal organization separate from its owners. E. Has owners called shareholders. 1-17 Chapter 01 – Accounting in Business 107. Which of the following accounting principles would require that all goods and services purchased be recorded at cost? A. Going-concern assumption. B. Matching principle. C. Cost principle. D. Business entity assumption. E. Consideration assumption. 108. Which of the following accounting principles prescribes that a company record its expenses incurred to generate the revenue reported? A. Going-concern assumption. B. Matching principle. C. Cost principle. D. Business entity assumption. E. Consideration assumption. 109. Revenue is properly recognized: A. When the customer’s order is received. B. Only if the transaction creates an account receivable. C. At the end of the accounting period. D. Upon completion of the sale or when services have been performed and the business obtains the right to collect the sales price. E. When cash from a sale is received. 110. If a parcel of land that was originally purchased for $85 000 is offered for sale at $150 000 is assessed for tax purposes at $95 000 is recognized by its purchasers as easily being worth $140 000 and is sold for $137 000 the land account transaction amount to handle the sale of the land in the seller’s books is: A. $85 000 increase. B. $85 000 decrease. C. $137 000 increase. D. $137 000 decrease. E. $140 000 decrease. 1-18
