The Measurement Method That Requires All Transactions to Be Recorded

question 72

Multiple Choice

The measurement method that requires all transactions to be recorded based on actual amount of cash received or paid, or cash-equivalent amount given in exchange, is the

• A) current cost method
• B) historical cost principle
• C) fair value method
• D) value in use method
• E) fulfilment method

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Definitions:

Common Stock

Represents ownership shares in a corporation, giving holders voting rights and a share in the company's profits through dividends.

Net Income

The conclusive earnings of a firm after removing all financial outlays and tax obligations from its aggregate revenue.

Equity Method

An accounting technique used by firms to assess the profits earned by their investments in other companies, incorporating the income on the investor's income statement.

Amortization

The approach of progressively depreciating the initial investment in an intangible asset over its effective life.