1. Debt securities sold to investors which should be repaid at a particular date some years in future are called

a. Accounts payable.
b. Notes receivable.
c. Taxes payable.
d. Bonds payable.

2. Using accrual accounting, expenses are recorded and reported only:

a. When they are incurred whether or not cash is paid.
b. When they are incurred and paid at the same time.
c. If they are paid before they are incurred.
d. If they are paid after they are incurred.

3. Which statement is right?

a. As long as company consistently uses cash basis of accounting, usually accepted accounting principles permit its use.
b. Use of cash basis of accounting violates both revenue recognition and matching principles.
c. Cash basis of accounting is objective because no one can be certain of amount of revenue until the cash is received.
d. As long as management is ethical, there are no problems with using the cash basis of accounting.

4. Which one of following is not a tool in financial statement analysis?

a. Horizontal analysis
b. Circular analysis
c. Vertical analysis
d. Ratio analysis

5. If year one equals $800, year two equals $840, and year three equals $880, percentage to be allocated for year three in trend analysis, suppose that year 1 is the base year, is

a. 110%.
b. 105%.
c. 95%.
d. 100%.