Which of the Following Is a True Statement

question 258

Multiple Choice

Which of the following is a true statement?

• A) Accounting income is generally equal to firm cash flow.
• B) Accounting statements are usually prepared to match the timing of income and expenses.
• C) The statement of financial position equity account represents the market value of the firm to shareholders.
• D) The statement of financial position tells investors exactly what the firm is worth.
• E) Assets are usually listed on the statement of financial position at market value.

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Definitions:

Selling Price

The amount of money charged for a product or service, or the sum of the value that customers exchange for the benefits of having or using the product or service.

Absorption Costing

An accounting method that includes all direct costs and allocated indirect costs (such as overhead) in the cost of a product.

Australian Accounting Standards

The set of accounting principles and procedures that must be followed by companies operating in Australia.

Variable Costing

An accounting method that includes only variable production costs (materials, labor, and overhead) in the cost of goods sold and treats fixed overhead costs as period expenses.