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CHAPTER 2 NAME ___________________________________
TEN-MINUTE QUIZ SECTION _____________ DATE____________
_____________________________________________________________________________
_
_____ 1. Generally accepted accounting principles (GAAP) are established by:
a. Internal Revenue Service (IRS)
b. U.S. Congress
c. Financial Accounting Standards Board (FASB)
d. GAAP Commission
_____ 2. The information in a financial statement relates to a specific business or company.
The owner’s personal financial records are not part of the financial statements of
the business. This is called the:
a. GAAP assumption
b. Matching principle
c. Going-concern assumption
d. Separate-entity assumption
_____ 3. To be useful, information must be:
a. Relevant
b. Reliable
c. Both A and B
d. Expensive
_____ 4. Assets:
a. Are economic resources owned by the company
b. Result from past events or transactions
c. Provide future benefit to the company
d. All of the above
_____ 5. Current assets:
a. Will be used or converted into cash within one year
b. Will not be used within one year
c. Include only cash
d. None of the above
_____ 6. Amazing Toy Company owes Northern Plastics Company $1,000. Amazing Toy
would reflect this on its:
a. Balance sheet
b. Income statement
c. Statement of shareholders' equity
d. Statement of cash flows
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-1
_____ 7. Revenue is recognized when:
a. Cash is received
b. It is earned
c. Expenses are recognized
d. Cash is paid
_____ 8. Expenses are recognized when:
a. Cash is received
b. Cash is paid
c. They are earned
d. They are incurred
_____ 9. Risk and return are:
a. Negatively correlated (when risk increases, expected return decreases)
b. Positively correlated (when risk increases, expected return increases)
c. Always equal
d. Not related
_____ 10. Noncurrent assets include:
a. Accounts receivable
b. Cash
c. Inventory
d. None of the above
ANSWER KEY - CHAPTER 2 – TEN-MINUTE QUIZ
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-2
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-3
