The Approach to Preparing Financial Statements Based on Recognizing Revenues

question 105

Multiple Choice

The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:

• A)Cash basis accounting.
• B)The expense recognition (matching)principle.
• C)The time period assumption.
• D)Accrual basis accounting.
• E)Revenue basis accounting.

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Definitions:

Range

The difference between the highest and lowest values in a data set, indicating the spread or dispersion of the set.

Chebyshev's Theorem

A statistical theorem that gives an inequality for assessing the probability that a random variable differs from its mean.

Empirical Rules

A statistical rule stating that for a normal distribution, nearly all data will fall within three standard deviations of the mean.

Interquartile Range

A measure of variability, calculated as the difference between the third (75th percentile) and first quartile (25th percentile), that indicates the middle 50% of the data.