Which of the Following Statements Concerning the Principle of Accounting

question 71

Multiple Choice

Which of the following statements concerning the principle of accounting conservatism is true?

• A) According to the GAAP principle of conservatism, financial statements should report expenses and losses in the earliest reasonable year.
• B) The GAAP principle of conservatism tries to prevent the overstatement of book income and the understatement of taxable income.
• C) According to the tax law principle of conservatism, taxpayers should deduct expenses and losses in the earliest reasonable year.
• D) According to the tax law principle of conservatism, taxpayers should deduct expenses and losses in the same year as they are reported on the taxpayers' financial statements.

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Definitions:

Tendonitis

Inflammation of the tendon.

Quadriceps Femoris

A large muscle on the anterior surface of the thigh that is composed of four separate muscles.

Tibialis Anterior

A muscle of the leg.

Vastus Lateralis

A muscle of the thigh that is part of the quadriceps, responsible for extending the leg at the knee.