The Accounting Principle That Requires Important Noncash Financing and Investing

question 63

Multiple Choice

The accounting principle that requires important noncash financing and investing activities be reported on the statement of cash flows or in a footnote is the:

• A) Materiality principle.
• B) Historical cost principle.
• C) Business entity principle.
• D) Full disclosure principle.
• E) Going concern principle.

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Definitions:

Travel Expense Deduction

A tax deduction for expenses related to travel for business purposes, including transportation, lodging, and meals.

Self-Employment Tax

A tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves, calculated on net earnings from self-employment.

Net Earnings

The amount of money left after all deductions, including taxes and operating expenses, have been subtracted from total income.

Standard Mileage Rate

A set rate per mile that taxpayers can use to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes.