The Default Subsequent Measurement Base for Financial Liabilities Is

question 18

Multiple Choice

The default subsequent measurement base for financial liabilities is:

• A) fair value using the effective interest rate.
• B) amortised cost using the effective interest rate.
• C) fair value through profit or loss.
• D) amortised cost through profit or loss.

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Definitions:

Aggregate Accounts Receivable

The total amount of money owed to a company by its customers for goods or services delivered but not yet paid for.

Credit Period

The length of time for which credit is extended. If the credit period is lengthened, then sales will generally increase, as will accounts receivable. This will increase the firm’s financing needs and possibly increase bad debt losses. A shortening of the credit period will have the opposite effect.

Credit Search

A process used by lenders to review an individual's or business's credit history before granting loans or credit.

Average Collection Period

The average number of days it takes for a business to receive payments owed by its customers for goods or services sold on credit.