The Key Components of the Conceptual Framework Include

question 47

Multiple Choice

The key components of the conceptual framework include

• A) the objective of financial reporting, qualitative characteristics, the going concern assumption, elements of financial statements and the measurement of those elements.
• B) the objective of financial reporting, qualitative characteristics, the going concern assumption, and elements of financial statements.
• C) the objective of financial reporting, qualitative characteristics, the going concern assumption, and measurement of the elements of financial statements.
• D) the objective of financial reporting, qualitative characteristics and the going concern assumption.

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Definitions:

Retail Method

An accounting technique used to estimate the ending inventory and cost of goods sold by calculating a cost to retail price ratio.

Cost-To-Retail Ratio

A method used to estimate the ending inventory of a business, calculated by dividing the cost of goods available for sale by the retail price of the goods.

Gross Profit Rate

The ratio of gross profit to net sales, used to assess a company's financial health by indicating the efficiency of its production process.

Gross Profit

The financial difference between sales and the cost of goods sold, indicating the efficiency of a company in managing its production and inventory.