Under the Accrual Basis of Accounting, Gains and Losses on Disposal

question 10

Multiple Choice

Under the accrual basis of accounting, gains and losses on disposal of capital assets

• A) are not recognized.
• B) are recognized when the proceeds (cash) of the sale are received (on the installment basis).
• C) are recognized only if there is a gain.
• D) are recognized when the sale occurs, regardless of when the cash is collected.

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Definitions:

Refundable Deposit

An amount of money given as security for an item that is intended to be returned, with the promise of repayment.

Marginal Private Cost

The change in a firm's total costs that comes from making one additional unit, considering only private costs without externalities.

Abatement Cost

The cost associated with reducing or eliminating negative environmental impacts, such as pollution.

Transferable Permits

Transferable permits are regulatory instruments that allow the holder to emit a certain amount of pollution or use a certain amount of a resource; they can be bought and sold, creating a market for these permits.