Which Statement Is True Regarding Accounting Accruals

question 10

Multiple Choice

Which statement is true regarding accounting accruals?

• A)Errors or changes in accounting policy that affect non-current items like equipment will result in follow-through changes over a relatively short period.
• B)The purchase of equipment involves an initial accrual to record the asset followed by accrual reversals in the form of depreciation expense and derecognition of the asset upon disposal.
• C)Operating activities generally have relatively long cash cycles.
• D)Financing and investing activities generally have relatively short cash cycles.

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Definitions:

Operating Cost

The total amount of money required to run a business, project, or device, excluding capital expenditures.

External Cost

Costs of a transaction that affect people other than the buyer or seller, which are not reflected in market prices.

Commercial Energy

Energy derived from commercial sources such as fossil fuels, intended primarily for businesses and manufacturing.

Wasted

Refers to resources or materials that are not used efficiently or are discarded without being utilized to their full potential.