The Accounting Principle That Requires That the Cost Flow Assumption

question 255

Multiple Choice

The accounting principle that requires that the cost flow assumption be consistent with the physical movement of goods is

• A) called the matching principle.
• B) called the consistency principle.
• C) nonexistent; that is, there is no accounting requirement.
• D) called the physical flow assumption.

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Definitions:

Marginal Tax Rate

The rate at which the last dollar of income is taxed, indicating the proportion of any additional dollar of income that must be paid in taxes.

Weighted Average Cost

A calculation that takes into account the varying costs of goods or services by weighting them according to their importance or quantity.

Internal Rate of Return

The discount rate that makes the net present value of all cash flows from a particular project zero.

Interest Rate

Interest: the financial charge applied to the borrower by the lender, calculated as a percentage of the principal for asset usage.