Which of the Following Accounting Concepts Requires That the Financial

question 21

Multiple Choice

Which of the following accounting concepts requires that the financial statements, including related notes, contain all relevant data a stakeholder would need to understand the financial condition and performance of the company?

• A) The adequate disclosure concept
• B) The cost concept
• C) The objectivity concept
• D) The matching concept

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Definitions:

Income Summary Account

An account used in closing process to aggregate all income and expenses accounts before determining and transferring the net income or loss to the capital account.

Adjusting Entries

Entries recorded at the conclusion of an accounting period to adjust the balances of accounts prior to the compilation of financial statements.

Income Statement Accounts

Accounts used to record transactions affecting a company’s income, expenses, and the resulting net income or loss over a period of time.

Balance Sheet Accounts

Categories within the balance sheet that include assets, liabilities, and shareholders' equity, each of which is essential for showcasing the company's financial health.