A Broad Principle That Requires Identifying the Activities of a Business

question 154

Multiple Choice

A broad principle that requires identifying the activities of a business with specific time periods such as months, quarters, or years is the:

• A) Operating cycle of a business.
• B) Time period assumption.
• C) Going-concern assumption.
• D) Matching principle.
• E) Accrual basis of accounting.

---

Definitions:

Capital Lease

A type of lease classified as a financial transaction where the lessee records the leased asset as their own property in their financial statements.

Interest Revenue

Income earned by a company for lending its money or other assets to another entity.

Sales-Type Lease

A sales-type lease is a financing arrangement where the lessor recognizes immediate profit on the assets leased, similar to a sale.

Present Value

Present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return.