1. Which of the following is a residual claim on the company’s resources?

A. Assets
B. Liabilities
C. Owner’s equity

 

2. Jonathan Trott is a manager at UFLP Ltd. He receives $1000 in cash for services which are to be delivered in the next period. In order to balance the accounting equation, which of the following is Trott most likely to do?

A. Record an asset.
B. Record a liability.
C. Record revenue.

 

3. The use of estimates in financial reporting:

A. is a limitation in the accounting model as they provide an opportunity for deliberate earnings manipulation.
B. can be avoided by using complex accounting models.
C. is an effort to misrepresent the economic performance of a company.

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