41 understandability is a characteristic that is a a secondary and interactive quali 4313979

41.Understandability is a characteristic that is

a.a secondary and interactive quality

b.a threshold for recognition

c.an overall quality

d.an enhancing quality

42.The materiality of an item of financial information refers to the likelihood that its omission or misstatement would affect the decisions of those relying on that information and thus make differing choices if the information had been presented. This concept most closely relates to the

a.financial magnitude of the item

b.verifiability of the item

c.neutrality of the item

d.confirmatory value of the item

43.All of the following items are classified as accounting assumptions and conventions except for

a.going concern

b.timeliness

c.monetary unit

d.reporting entity

44.The city of Anchorage sold land for its appraised value to the Big Bear Oil Company on June 1, 2014, that originally cost the city $950,000. On June 1, 2014, the land was appraised at a value of $1,400,000, and on December 31, 2014, the land's value was estimated to be $1,450,000. On Big Bear Oil Company's balance sheet at December 31, 2014, the land should be valued at

a.$1,400,000

b.$1,450,000

c.$950,000

d.$0

45.Using the straight-line method to amortize patents is an application of expense recognition using

a.cause and effect

b.a systematic and rational allocation over time

c.immediate consumption

d.the percentage-of-completion method

46.Using an allowance method of accounting to recognize uncollectible accounts receivable is an application of which accounting convention?

a.revenue recognition

b.historical cost

c.matching principle

d.period of time

47.The state legislature is currently debating a bill that, if passed, would require the Roberts Company to go out of business. Which of the following principles or assumptions related to the preparation of Roberts financial statements is most directly affected by this impending vote of the legislature?

a.going concern

b.verifiability principle

c.entity concept

d.materiality concept

48.A company that uses accounting methods in preparing its tax returns that differ from the accounting methods used to prepare its financial statements is

a.in violation of the consistency principle

b.not necessarily violating either the income tax laws or generally accepted accounting principles

c.probably guilty of tax evasion

d.in violation of the relevance assumption

49.Which one of the following assumptions or principles most logically supports the preparation of a single set of consolidated financial statements that combines the financial information of several wholly owned but separately identifiable businesses?

a.historical cost

b.industry practices

c.reporting entity

d.Materiality

50.Expenses are recognized and matched against revenues on the basis of three principles. Which of the following is not one of these principles?

a.immediate consumption

b.associating cash flows

c.systematic and rational allocation over time

d.cause and effect