1. Which one of the following is not a recognized method of recognizing assets as expenses in a particular accounting period?

Customers’ account balances in accounts receivable are assigned to expense in the period in which each customer pays.

Prepaid insurance is assigned to expense as the insurance expires.

A building is depreciated and its cost is assigned to the current and future accounting periods in which the building is expected to be used.

Merchandise inventory is assigned to cost of goods sold in the period the goods are sold.

2. The internal rate of return concept is best explained by which of the following?

rate where NPV is equal to zero

point where initial investment has been returned

marginal cost of capital

average book value