In Its First Year of Business,Declan Industries Earned $175,000 of Revenues

question 127

Multiple Choice

In its first year of business,Declan Industries earned $175,000 of revenues of which $140,000 was collected.It also incurred $157,500 in expenses for which $140,000 was paid.Which of the following statements are correct?

• A)Declan should use cash basis accounting for external reporting purposes as required under GAAP and IFRS.
• B)Declan should report net income of $17,500 for external reporting purposes.
• C)Declan should report $0 net income for external reporting purposes.
• D)Declan should report net income of $35,000 for external reporting purposes.

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Definitions:

SARA

An acronym standing for the Species at Risk Act, a Canadian law enacted to provide for the recovery of wildlife species that are at risk of extinction.

Captive Breeding

A conservation strategy involving the breeding of endangered species in controlled environments, such as wildlife reserves or zoos, with the aim of reintroducing them to their natural habitats.

Extinction Spasm

Extinction Spasm is a rapid increase in the rate of extinction experienced by species within a relatively short geological period, often due to human activities.

Eco-Catastrophe

A major ecological disaster or event that causes significant harm to the environment and living organisms.