1. The accounting matching principle dictates that we a. match expenses up with

1. The accounting matching principle dictates that we a. match expenses up with the employees that incur them b. prorate the cost of an asset over its expected economic life c. invoice the customer as soon as the merchandise is produced d. all of the above 2. Which of the following causes net income to differ from cash flow? a. depreciation b. the purchase of inventory on credit c. the sale of merchandise on credit d. all of the above 3. Managers whose bonuses are based on the income of the firm tend to overstate the value of accounts receivable and inventory with the following result: a. the firms value is less than it is held out to be b. profit is more than it is held out to be c. the firms value is more than it is held out to be d. liabilities are less than they are held out to be 4. Holding all other variables constant a increase in EAT can be caused by a decrease in: a. Depreciation expense b. The cost ratio c. The tax rate d. Both a and c e. a b and c are correct.

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