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:

Value Basis

The method or approach used to determine the value of an asset, liability, or transaction.

Joint Costs

Costs incurred during the production of multiple products up until the point where these products become separately identifiable, making allocation necessary for cost accounting purposes.

Market Value

The current price at which an asset or service can be bought or sold in a marketplace.

Preon

Fundamental particles proposed as building blocks of quarks and leptons, not yet observed experimentally.