Which of the Following Statements About Accounting Estimates Is True

question 49

Multiple Choice

Which of the following statements about accounting estimates is true?

• A)Accounting estimates are disclosed in the notes to the financial statements.
• B)Acceptable accounting estimates are covered by GAAP.
• C)Accounting estimates are necessary because economic events and transactions are not known with certainty.
• D)Accounting estimates do not have a significant impact on reported earnings.

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Definitions:

Condensed Income Statements

Condensed Income Statements summarize the revenue, expenses, and net income of a company, providing a simplified overview of its financial performance over a specified period.

Merchandising Companies

Businesses that purchase goods in finished form and resell them to consumers without further processing.

Purchases Discount

A reduction in price given by a seller to a buyer for paying an invoice within a specified time frame.

Early Payment

A payment made before its due date, often incentivized by discounts or to avoid interest charges.