The Approach to Preparing Financial Statements Based on Recognizing Revenues

question 50

Multiple Choice

The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:

• A)The matching principle.
• B)The operating cycle of a business.
• C)Cash basis accounting.
• D)Accrual basis accounting.
• E)The revenue recognition principle.

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Definitions:

Personal Factors

Characteristics or attributes of an individual, including personality traits, beliefs, and life experiences, that influence behavior and reactions.

Overestimation

The action of assessing someone or something as greater or more significant than it actually is, often leading to unrealistic expectations.

Fundamental Attribution Error

The tendency for observers to overemphasize personality traits and underestimate situational factors when explaining others' behavior.

Opportunities

Situations or conditions that present chances for advancement, improvement, or success.