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The accounting principle that requires financial statements (including notes) to report all relevant information about the operations and financial condition of a company is called: A

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1. The accounting principle that requires financial statements (including notes) to report all relevant information about the operations and financial condition of a company is called:
   A. Relevance
   B. Full disclosure
   C. Evaluation
   D. Materiality

 

2. A company receives a 10%, 90-day note for $1,500. The total interest due upon the maturity date is:
   A. $37.50
   B. $150.00
   C. $75.00
   D. $50.00

 

 

3. The accounts receivable turnover is calculated by:
   A. Dividing net sales by average accounts receivable
   B. Dividing net sales by average accounts receivable and multiplying by 365
   C. Dividing average accounts receivable by net sales
   D. Dividing average accounts receivable by net sales and multiplying by 365

 

4. The amount of bad debt expense can be estimated by:
   A. The percent of sales method
   B. The percent of accounts receivable method
   C. The aging of accounts receivable method
   D. Only b and c
   E. Any of the three methods listed

 

 

5. The materiality principle:
   A. States that an amount can be ignored if its effect on financial statements is unimportant to the user's business decisions
   B. Requires use of the allowance method for bad debts
   C. Requires use of the direct write-off method
   D. States that bad debts not be written off

 

6. Plant assets are:
   A. Tangible assets used in the operation of a business that have a useful life of more than one accounting period
   B. Current assets
   C. Held for sale
   D. Intangible assets used in the operations of a business that have a useful life of more than one accounting period

 

 

7. Once the estimated depreciation expense for an asset is calculated:
   A. It cannot be changed due to the historical cost principle
   B. It may be revised (changed) based on new information
   C. Any changes are accumulated and recognized when the asset is sold
   D. It cannot be changed due to the consistency principle

 

8. Land improvements are:
   A. Assets that increase the usefulness of land and like land, are not depreciated
   B. Assets that increase the usefulness of land, but that have a limited useful life and are subject to depreciation
   C. Included in the cost of the land account
   D. Expensed in the period incurred

 

 

9. The formula for computing annual straight-line depreciation is:
   A. Depreciable cost divided by useful life in units
   B. Cost plus salvage value divided by the useful life in years
   C. Cost less salvage value divided by the useful life in years
   D. Cost divided by useful life in years

 

10. The total cost of an asset less its accumulated depreciation is called:
    A. Historical cost
    B. Book value
    C. Present value
    D. Current (market) value
    E. Replacement cost