Which of the Following Does Not Require an Entity to Use

question 6

Multiple Choice

Which of the following does not require an entity to use estimates when preparing its financial statements?

• A) The original purchase price of an asset
• B) Provision for employee benefit such as long-service leave
• C) Doubtful debts expense
• D) Depreciation expense

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Definitions:

Short Run

A time period in economics during which at least one input, such as plant size, is fixed and cannot be altered.

Profit Maximization

The procedure through which a business identifies the pricing and production volume that yields the highest earnings.

Market Price

The price at which a good or service is offered in the marketplace.

Profit Maximization

A rephrased definition: The strategy or aim of a firm to achieve the highest profit possible, usually by adjusting outputs, prices, or production costs.