The Framework Outlines Two Underlying Assumptions of Financial Statements

question 38

Multiple Choice

The Framework outlines two underlying assumptions of financial statements.These arE.

• A)fair value basis and insolvency assumption.
• B)accrual basis of accounting and going concern assumption.
• C)cash basis of accounting and insolvency assumption.
• D)historical cost accounting and limited life concept.
• E)fair value basis of measurement and perpetual life concept.

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Definitions:

Decentration

Simultaneous focusing on more than one aspect or dimension of a problem or situation.

Principle

A fundamental truth or proposition that serves as the foundation for a system of belief or behavior.

Reaction Time

The amount of time required to respond to a stimulus.

Cognitive Flexibility

The mental ability to switch between thinking about two different concepts, or to think about multiple concepts simultaneously.