The Approach to Preparing Financial Statements Based on Recognizing Revenues

question 159

Multiple Choice

The approach to preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called

• A) Accrual basis accounting
• B) The operating cycle of a business
• C) Cash basis accounting
• D) The revenue recognition principle
• E) The matching principle

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Definitions:

Educational Institutions

Organizations dedicated to the instruction and training of students in various fields of study.

Fully-Funded Pension Plan

A pension plan that has enough assets to provide for all accrued benefits owed to participants.

Equities

Shares of ownership in a company, representing a claim on part of the company's assets and earnings.

Contingent Immunization

A mixed passive-active strategy that immunizes a portfolio if necessary to guarantee a minimum acceptable return but otherwise allows active management.