Which of the Following Is an Application of Conservatism

question 123

Multiple Choice

Which of the following is an application of conservatism?

• A) reporting inventory at the lower of cost or market
• B) reporting only material amounts in the financial statements
• C) reporting all relevant information in the financial statements
• D) using the same depreciation method from period to period

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Definitions:

Annuity Holders

Individuals or entities that have invested in an annuity contract, which typically provides fixed or variable payments at regular intervals.

Insurance Company

A financial institution that provides various forms of insurance policies to protect individuals or businesses against risks in exchange for premiums.

Modified Duration

A measure of the sensitivity of a bond’s price to changes in interest rates, indicating how much the price will change as interest rates move.

Semiannually

Occurring or payable twice a year.