Which of the Following Is True

question 111

Multiple Choice

Which of the following is true?

• A) Special drawing rights are loans to countries made by the IMF.
• B) Changes in the quantity of special drawing rights are tied to changes in the quantity of gold.
• C) Special drawing rights are a paper substitute for gold.
• D) Special drawing rights are not held as international reserves.

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Definitions:

Accrual Basis

An accounting method where revenues are recorded when earned and expenses are recorded when incurred, regardless of when cash is exchanged.

Recognizes Revenues

The process of recording revenue in the financial statements when it is earned and realizable, in accordance with the revenue recognition principle.

Expense Recognition Principle

Accounting principle that dictates expenses should be recognized in the period in which they are incurred to generate revenues.

Accounting Period

This is a specific duration of time for which financial statements are prepared to understand and evaluate a company's financial performance.