Financial Information Does Not Demonstrate Consistency When

question 5

Multiple Choice

Financial information does not demonstrate consistency when

• A)firms in the same industry use different accounting methods to account for the same type of transaction.
• B)a company changes its estimate of the salvage value of a fixed asset.
• C)a company fails to adjust its financial statements for changes in the value of the measuring unit.
• D)none of these.

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Definitions:

Accumulated Depreciation

The total amount of a tangible asset's cost that has been allocated to depreciation expense since the asset was put into use.

Fees Earned

Revenue earned from providing services, as opposed to selling goods.

Income Summary

An account used in the closing process that summarizes the revenues and expenses of an accounting period.

Capital

Financial assets or the financial value of assets, such as cash and goods, working capital used in a business by a person, company, or organization.