Answered: 1. S1: A change from cash basis…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1. S1: A change from cash basis accounting to accrual basis accounting is an example of change in accounting policy. S2: A change in the service life of an equipment is an example of a correction of an error.

a. Both statements are true

b. Only S1 is true

c. Only S2 is true

d. Both statements are not true

2. An entity is reporting in a hyper-inflationary economy. The monetary assets exceed the monetary liabilities. Which of the following statements is true?

a. There is a loss on the net monetary position.

b. There is a gain on the net monetary position

c. The gain or loss on the net monetary position is recognized in other comprehensive income.

d. None of the statements is true

3. Book value per share is

a. The equity an ordinary shareholder has in the net assets of the corporation from owning one share of stock

b. The equity an ordinary shareholder has in the total assets of the corporation from owning one share of stock

c. Computed only for ordinary shareholders

d. None of the statements is correct.

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