When net assets are recorded at their historical cost and changes in net assets are not recorded unless an event, transaction, or circumstance occurs, the (Points: 2)financial capital maintenance approach is being used transactional approach is being used physical capital maintenance approach is being used comprehensive income approach is being used 2. Which of the following statements best defines the transactional approach? (Points: 2)The transactional approach is justified by the qualitative characteristic of relevance. The transactional approach is conceptually identical to the capital maintenance concept. Under the transactional approach, assets and liabilities are generally valued at the historical cost. The transactional approach follows the accrual basis of accounting. 3. On December 31, 2010, the net assets of Marino Manufacturing amounted to $40,000. Net income calculated by using the financial capital maintenance concept amounted to $12,000. During the year, additional common stock was issued for $8,000, and $5,000 of dividends was paid. The net assets at January 1, 2010, amounted to (Points: 2)$31,000 $37,000 $20,000 $25,000 4. Comprehensive income is an important concept in accounting because it represents (Points: 2)all changes in equity changes in equity from non-owner sources changes in liabilities minus assets the impact on equity of all transactions 5. Which of the following items would be excluded from “core activities” as defined by the AICPA? (Points: 2)recurring non-operating gains financing costs sales revenue sales commissions 6. Which of the following is not an expense recognition approach recognized by the FASB as an expense recognition principle to properly match expenses against revenues? (Points: 2)immediate recognition systematic and rational allocation cash payment association of cause and effect 7. Realization of revenue occurs when (Points: 2)the item is formally recorded and reported in the financial statements noncash resources are converted into cash or rights to cash the actual exchange of noncash resources into cash when a transaction is both realized and realizable 8. A revenue recognition method that recognizes revenue before the time of sale is (Points: 2)percentage-of-completion installment cost recovery point of sale 9. Which of the following expenses is an example of expense recognition under the immediate recognition principle? (Points: 2)sales commissions depreciation management salaries transportation out 10. Which of the following statements concerning the sale of a business component is true? (Points: 2)When the sale date for the component is after the current year end, depreciation expense for the component’s assets is included in the discontinued operations section of the income statement. The results of discontinued operations should be reported on the income statement after extraordinary items but before cumulative effect of a change in accounting principle. The taxed effect of component-disposition gains or losses need not be disclosed on the face of the income statement. The Financial Accounting Standards Board concluded that component-disposition gains or losses should be classified as extraordinary items.