Reference no: EM132995880

Problem 1: In classifying the elements of financial statements, the primary distinction between revenues and gains is

A) the materiality of the amounts involved.

B) the likelihood that the transactions involved will recur in the future.

C) the nature of the activities that gave rise to the transactions involved.

D) the costs versus the benefits of the alternative methods of disclosing the transactions involved.

Problem 2: A decrease in net assets arising from peripheral or incidental transactions is called a(n)

A) capital expenditure.

B) cost.

C) loss.

D) expense.

Problem 3: Generally accepted accounting principles

A) are fundamental truths or axioms that can be derived from laws of nature.

B) derive their authority from legal court proceedings.

C) derive their credibility and authority from general recognition and acceptance by the accounting profession.

D) have been specified in detail in the FASB conceptual framework.