For Each Financial Concept Listed in 1 Through 5 Below

question 85

Essay

For each financial concept listed in 1 through 5 below, identify in which category (listed in a through f) it should be matched. You may use each letter more than once or not at all.
Categories
a. Similar events are measured using identical accounting methods from one period to the next.
b. Expense is recognized in the same period that its generated revenue is recognized.
c. Different firms use identical accounting methods to measure similar events.
d. Present value of future cash flows.
e. Significant portion of effort made; major portion of cost incurred, objectively measured, and reasonably assured of ultimate cash receipt.
____ 1. Comparability
____ 2. Objectivity
____ 3. Revenue recognition principle
____ 4. Matching principle
____ 5. Consistency

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Definitions:

Variable

A characteristic, number, or quantity that increases or decreases over time, or takes different values in different situations.

Fixed

Costs or expenses that do not change with the level of production or sales activity, such as rent or salaries.

Committed Fixed Costs

Investments in facilities, equipment, and basic organizational structure that can’t be significantly reduced even for short periods of time without making fundamental changes.

Short Term

A time period typically lasting less than one year, used to evaluate financial performance, investments, and objectives that are expected to be achieved within a brief timeframe.