1. Recording depreciation expense each period is essential in accordance with:

a. Matching principle.
b. Going concern principle.
c. Cost principle.
d. Asset valuation principle.

2. Common characteristic possessed by all assets is:

a. Tangible nature.
b. Long life.
c. Great monetary value.
d. Future economic benefit.

3. Dividends are deducted from:

a. Common stock.
b. Retained earnings.
c. Cash.
d. Revenue.

4.Double-entry system needs that each transaction should be recorded:

a. In at least two different accounts.
b. In two sets of books.
c. In a journal and in a ledger.
d. First as a revenue and then as an expense.

5. Which of the given reflect balances of prepayment accounts prior to adjustment?

a. Balance sheet accounts are understated and income statement accounts are understated.
b. Balance sheet accounts are overstated and income statement accounts are overstated.
c. Balance sheet accounts are overstated and income statement accounts are understated.
d. Balance sheet accounts are understated and income statement accounts are overstated.