Security a and Security B Have Similar Risks

question 42

Multiple Choice

Security A and Security B have similar risks. However, Security A has a higher rate of return than Security B. The return on Security A minus the return on Security B is referred to as which one of the following?

• A)market return
• B)abnormal return
• C)deviated return
• D)excessive return
• E)real return

Know the differentiation between the cash basis and accrual basis of accounting, including the implications for financial reporting.

Apply the expense recognition (matching) principle to determine when expenses should be recognized in the income statement.

Accurately prepare and interpret journal entries for various accounting transactions.

Recognize and differentiate between accounts with debit and credit balances within the context of the double-entry accounting system.