The Accounting Convention of _____ Guides the Relative Sophistication of the Accounting

question 84

Multiple Choice

The accounting convention of _____ guides the relative sophistication of the accounting system.

• A)objectivity
• B)cost benefit
• C)conservatism
• D)materiality

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Definitions:

Fair Value

Fair Value is the price at which an asset would be bought or sold in a transaction between willing parties, other than in a liquidation scenario.

Accumulated Depreciation

The total amount of depreciation for a fixed asset that has been charged to expense since the asset was acquired and put into use.

Original Cost

The initial purchase price or construction cost of an asset or investment, not adjusted for inflation, depreciation, or other factors over time.

Fair Value

An estimate of the price at which an asset or liability could be exchanged in an orderly transaction between market participants at the measurement date.