Some Companies Choose to Avoid Assigning Incidental Costs of Acquiring

question 131

Multiple Choice

Some companies choose to avoid assigning incidental costs of acquiring merchandise to inventory by recording them as cost of goods sold when incurred.The principle that supports this is called:

• A)The matching principle.
• B)The materiality constraint.
• C)The cost principle.
• D)The conservation constraint principle.
• E)The lower of cost or market principle.

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Definitions:

Securities Act

A federal law enacted in 1933 that governs the primary issuance of securities (stocks, bonds) to the public, aiming to ensure transparency and prevent fraud in the securities market.

Accredited Investors

Individuals or entities that meet certain financial criteria, allowing them to invest in securities not registered with financial authorities.

Sophisticated Investors

Individuals or entities with significant experience, assets, and knowledge, enabling them to assess investment risks and opportunities.

Securities Exchange Act

A U.S. law enacted in 1934 that governs the trading of securities, such as stocks and bonds, aimed at protecting investors and maintaining fair markets.