The most serious weakness is asking for action too quickly and providing no incentive for action

The most political issue in the FASB's most recent deliberations and amendments to GAAP on business combinations was:

A. The negative effects on subsequent earnings of amortizing goodwill if firms were required to use the purchase method of accounting for the combination. B. The negative effects on subsequent earnings of amortizing goodwill if firms were required to use the pooling method of accounting for the combination. C. The unrealistic balance sheet assets that would be created if firms were required to use the purchase method of accounting for the combination. D. The unrealistic balance sheet assets that would be created if firms were required to use the pooling method of accounting for the combination.

A firm's balance sheet shows the following changes over the most recent quarter:

Cash increases by $1,000,000, long-term assets increase by $3,000,000, accounts payable increase by $750,000, long-term-debt increases by $1,000,000, retained earnings increase by $1,250,000, and new equity increases by $1,000,000. Which of the following statements must be TRUE? A) Cash was a $1,000,000 source of funds for the firm. B) Long-term debt was a $1,000,000 source of funds for the firm. C) Because retained earnings increased by more than $500,000, the firm could not have realized a profit for the quarter. D) All of the new equity must have been provided by investors who were not shareholders prior to the issuance of new equity.