1. Recording depreciation expense each period is essential in accordance with:
a. cost principle.
b. going concern principle.
c. matching principle.
d. asset valuation principle.
2. Common characteristic acquired by all assets is:
a. great monetary value.
b. long life.
c. tangible nature.
d. future economic benefit.
3. Dividends are deducted from:
a. revenue.
b. retained earnings.
c. cash.
d. common stock.
4. Double-entry system needs that each transaction should be recorded:
a. in a journal and in a ledger.
b. in two sets of books.
c. in at least two different accounts.
d. first as a revenue and then as an expense.
5. Which of the given reflect balances of prepayment accounts prior to adjustment?
a. Balance sheet accounts are overstated and income statement accounts are understated.
b. Balance sheet accounts are overstated and income statement accounts are overstated.
c. Balance sheet accounts are understated and income statement accounts are understated.
d. Balance sheet accounts are understated and income statement accounts are overstated.