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:

Uncollectible Accounts

Debts owed to a company that are deemed uncollectable and written off as a bad debt expense.

Stockholders' Equity

The ownership stake of shareholders in a corporation, calculated as the value of the company's assets minus its liabilities.

Common Stock

A type of equity security that represents ownership in a corporation, usually carrying voting rights.

Shares Outstanding

Shares outstanding refer to the total number of a company's shares that are currently held by all its shareholders, including share blocks held by institutional investors and restricted shares.