The Monetary Assumption

question 89

Multiple Choice

The monetary assumption:

• A)Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold.
• B)Means that we can express transactions and events in monetary,or money,units.
• C)Presumes that the life of a company can be divided into time periods,such as months and years,and that useful reports can be prepared for those periods.
• D)Means that a business is accounted for separately from other business entities,including its owners.
• E)Prescribes that a company record the expenses it incurred to generate the revenue reported.

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Definitions:

Net Working Capital

The difference between a company's current assets and its current liabilities, indicating the liquidity and operational efficiency.

Operating Cash Flow

A measure of the cash a company generates from its regular business operations, indicating its ability to generate sufficient revenue to cover its operational expenses.

Fixed Asset Value

The net value of a company's physical assets, like buildings and machinery, after accounting for depreciation or impairment.