Reference no: EM132765985

Problem 1: Which of the following statements is correct?

a) All increases in cash and accounts receivable represent revenue which increases owners' equity.

b) The fact that an expense is recognized on the income statement indicates that an equivalent out lay of cash has been made in the same period

c) Assets are normally recorded at cost for accounting purposes because cost is objective and value is subjective.

d) Losses are asset expirations that are incurred voluntarily to produce revenue.

Problem 2: Which of the following is not one of the essential characteristics for an item to be reported as a liability on the balance sheet?

a) it is a present obligation of a particular entity

b) it is payable to specifically identifiable payees

c) it involves a future sacrifice of economic benefits

d) it is reasonably measurable in terms of money