Which of the Following Statements Best Defines the Transactional Approach

question 46

Multiple Choice

Which of the following statements best defines the transactional approach?

• A)The transactional approach is justified by the qualitative characteristic of relevance.
• B)The transactional approach is conceptually identical to the capital maintenance concept.
• C)Under the transactional approach, assets and liabilities are generally valued at the historical cost.
• D)The transactional approach follows the accrual basis of accounting.

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Definitions:

Relevant Costs

Future costs that will differ under various alternatives, considered important for making financial decisions.

Special Order

An order for goods or services that is outside the company's normal scope of operations or requires customization to meet the customer's specific requirements.

Excess Capacity

A situation where a company can produce more goods or services than currently demanded by the market, indicating underutilization of resources.

Allocated Fixed Costs

Fixed costs that are assigned or distributed across different departments, products, or activities within a company for budgeting and accounting purposes.