Which Accounting Assumption Requires That Only Those Things That Can

question 115

Multiple Choice

Which accounting assumption requires that only those things that can be expressed in dollar values are included in the accounting records?

• A)monetary unit assumption.
• B)historical cost principle.
• C)periodicity assumption.
• D)full disclosure principle.

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Definitions:

Price Makers

Firms that possess the power to set the price of a good or service because of a lack of competition or the unique nature of the product.

Purely Competitive

A market structure characterized by a large number of small firms, free entry and exit, homogeneity of products, and perfect information that leads to the price being dictated by the market.

Monopolistic Firms

Firms operating in a market structure with many competitors that sell differentiated products.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, indicating the goods' sensitivity to price changes.